The Merger Regulation as it stands only applies to transactions resulting in a lasting change of control. Economic theory and the Commission's experience suggest that non-controlling minority shareholdings may also in certain instances cause anticompetitive harm. The financial incentives and the influence on the target resulting from such minority stakes can raise competition concerns based on the same theories of harm as pursued under merger rules, namely unilateral or coordinated effects or input foreclosure. Unlike other competition authorities both inside and outside the EU (such as Germany, the United Kingdom, or the United States) the Commission currently has no opportunity to address such concerns where they are caused only by the acquisition of minority participations.
The European Commission is looking forward to review and potentially revise its rules for reviewing minority share acquisitions under EU competition law. The European Commission is considering amending the EUMR to allow it to review certain acquisitions of non‐controlling minority shareholdings. Under the current EUMR regime, the Commission can only review the acquisition of a minority shareholding and possibly prohibit it ex ante where it confers control.
Control means the possibility of exercising decisive influence on an undertaking on the basis of rights, contracts or any other means (Article 3(2) EUMR). Hence, the acquisition of a minority shareholding does not fall under the scope of the EUMR and under the Commission’s jurisdiction unless it enables the minority shareholder to determine the strategic commercial behavior of the target. While in some instances competition problems caused by non-controlling minority participations might be tackled by the antitrust rules of Article 101 or 102 TFEU, these provisions would not seem to deal with all cases in which non-controlling minority shareholdings may cause competitive harm. In particular Article 101 only applies where there is an agreement between the parties which could be qualified as having the effect of restricting competition.
Table of Contents
1 INTRODUCTION
2 THE TREATMENT OF MINORITY OF PARTICIPATIONS IN COMPETITORS UNDER PRESENT EU COMPETITION LAW
2.1 The Treatment of Minority Shareholdings under the EUMR
2.1.1 Only Controlling Minority Shareholdings are subject to review under EUMR
2.1.2 The Acquisition of Non-Controlling Minority Shareholdings Falls outside EUMR
2.1.3 Review of Existing Non-Controlling Minority Shareholdings under the EUMR
2.2 The Treatment of Minority Shareholdings under EU Antitrust Law
2.2.1 Article 101 TFEU
2.2.2 Article 102 TFEU
2.2.3 Observations
3 THE TREATMENT OF MINORITY PARTICIPATIONS IN OTHER EU MEMBER STATESNATIONAL REGIMES I.E. GERMANY, AUSTRIA AND U.K.
4 IMPORT ON NON-CONTROLLING MINORITY SHAREHOLDINGS (“STRUCTURAL LINKS”) ON COMPETITION: AN ECONOMIC APPROACH
4.1 Unilateral effects
4.2 Coordinated effects
4.3. Deterring potential entry
5 PROPOSED CHANGES TO RULES ON MINORITY SHAREHOLDINGS BY EUROPEAN COMMISSION
6 MAJOR CONCERNS
7 CONCLUSION
Research Objectives and Key Topics
This paper examines the current limitations of European Union merger regulation regarding the acquisition of non-controlling minority shareholdings, often referred to as "structural links." It evaluates whether current legal frameworks are sufficient to address potential anti-competitive harm and analyzes the European Commission's proposals to extend its jurisdiction in this area to bridge existing enforcement gaps.
- The scope of current EU Merger Regulation (EUMR) regarding minority stakes.
- Antitrust assessment of minority shareholdings under Articles 101 and 102 TFEU.
- Comparative analysis of national merger control regimes in Germany, Austria, and the U.K.
- Economic theories of harm including unilateral effects, coordinated effects, and entry deterrence.
- Proposed legislative reforms and models for regulatory intervention by the European Commission.
Excerpt from the Book
2.1.2 The Acquisition of Non-Controlling Minority Shareholdings Falls outside EUMR
In contrast, the acquisition of minority participations that do not give the acquirer additional influence, or only a more limited degree of influence that does not amount to “decisive influence over the strategic behaviour” of the target, is not covered by the EUMR, even if the companies involved fulfil the turnover thresholds. This was most recently confirmed by the General Court in Aer Lingus, where Ryanair had acquired a shareholding short of 30% in Aer Lingus, but where such shareholding was not accompanied by further rights or the de facto possibility of influencing the strategic decision making of Aer Lingus in a decisive manner.
Summary of Chapters
1 INTRODUCTION: This chapter provides an overview of the current EUMR scope and the legislative motivation for potentially reviewing non-controlling minority share acquisitions.
2 THE TREATMENT OF MINORITY OF PARTICIPATIONS IN COMPETITORS UNDER PRESENT EU COMPETITION LAW: This section details how minority stakes are currently handled under the EUMR and existing EU antitrust articles, highlighting the distinction between controlling and non-controlling interests.
3 THE TREATMENT OF MINORITY PARTICIPATIONS IN OTHER EU MEMBER STATESNATIONAL REGIMES I.E. GERMANY, AUSTRIA AND U.K.: This chapter compares national approaches to minority acquisitions, noting specific notification requirements and "plus factors" used in Germany, Austria, and the United Kingdom.
4 IMPORT ON NON-CONTROLLING MINORITY SHAREHOLDINGS (“STRUCTURAL LINKS”) ON COMPETITION: AN ECONOMIC APPROACH: The author outlines economic theories of harm, specifically focusing on how structural links can lead to unilateral effects, coordinated conduct, or deterrence of new market entrants.
5 PROPOSED CHANGES TO RULES ON MINORITY SHAREHOLDINGS BY EUROPEAN COMMISSION: This chapter introduces the three proposed systemic reforms—notification, self-assessment, and transparency systems—intended to close the enforcement gap.
6 MAJOR CONCERNS: This section discusses the potential negative impacts of the proposed reforms, including increased legal uncertainty, higher transaction costs, and disproportionate effects on industries reliant on risk-sharing.
7 CONCLUSION: The author summarizes the findings, arguing that while there is a need for clarity, any extension of jurisdiction should avoid imposing undue administrative burdens on innocuous transactions.
Keywords
European Merger Regulation, EUMR, minority shareholdings, structural links, EU competition law, Article 101 TFEU, Article 102 TFEU, antitrust, decisive influence, non-controlling interests, merger control, market competition, European Commission, regulatory reform, economic theory.
Frequently Asked Questions
What is the core subject of this paper?
The paper primarily investigates the regulatory gaps in European Union merger control regarding non-controlling minority shareholdings and whether the Commission should expand its oversight powers to address potential anti-competitive outcomes.
What are the central themes discussed?
Key themes include the legal definition of "control" under the EUMR, the application of antitrust articles (101 and 102 TFEU) to minority stakes, and the debate over regulatory proportionality.
What is the primary goal of the author?
The primary goal is to evaluate the necessity and form of potential EU-wide reforms regarding the monitoring of "structural links" while ensuring that such regulations do not become overly burdensome.
Which scientific methodology is applied?
The work utilizes a combination of legal analysis, case law study (such as Philip Morris, Gillette, and Aer Lingus), and an assessment of economic theories of harm within the context of European competition law.
What is covered in the main body of the work?
The main body covers current EU and national regulatory regimes, economic impacts of structural links, and a critical analysis of the three reform models proposed by the European Commission.
Which keywords best describe this research?
The research is best described by keywords such as European Merger Regulation, minority shareholdings, structural links, antitrust, and regulatory reform.
How do Germany and Austria differ from the current EU approach regarding minority acquisitions?
Unlike the current EU-wide system which largely focuses on "decisive influence," Germany and Austria have specific notification thresholds for minority investments above 25% and consider qualitative "plus factors" to assess competitively significant influence.
What are the potential drawbacks of the "full notification" model proposed by the Commission?
The author notes that while a full notification system offers high legal certainty, it could contradict the Commission's goal of "smarter regulation" by generating a vast number of unnecessary administrative filings for transactions that pose no real competitive threat.
- Quote paper
- Ziya Baghirzade (Author), 2014, The goals and scope of European merger regulation. Acquisition of minority shareholderships, Munich, GRIN Verlag, https://www.hausarbeiten.de/document/277554
