REVIEW
| DOI | http://doi.org/10.1111/j.1468-2230.1994.tb01929.x |
| Date | 01 January 1994 |
| Published date | 01 January 1994 |
Reviews
REVIEWS
Christopher Jones and
F.
Enrique Gonzalez-Diaz, ed Colin Overbury,
The
EEC
Merger
Regulation,
London: Sweet
&
Maxwell,
1992,
xxi
+
328
pp, hb
E50.00.
EEC Council Regulation
4064/89
on the control of concentrations between
undertakings came into force on
20
September
1990,
introducing into EEC law a
completely new system for the regulation of mergers. Between then and
10
September
1992,
the Commission issued
1
13
merger decisions. Lawyers working
in this field have obviously had much to master, and there has been no shortage of
books, articles and conference proceedings to help them. This excellent book,
however, is outstanding among them.
The authors are two Commission officials
-
a member of the Merger Task
Force and a member of the EC Legal Service
-
and the editor was the first head of
the Merger Task Force. This is therefore a view from the inside: an analysis of the
Regulation by those who have had to implement it, and an explanation of the
Commission’s policy towards those transactions notified to it in the first two years
of the Regulation’s operation.
The Regulation had a long gestation period even by EC standards. The
Commission first proposed such legislation
in
1973,
but any hope that after sixteen
years of reflection the final version would be a model of problem-free clarity was
of course in vain, for the Regulation was the subject of fierce negotiations and
bargaining up to the moment of its adoption (with the
UK
well in the fore of the
argument). The whole topic of merger control, whether at EEC or national level, is
one of great controversy and the extent of domestic control varies considerably
between the Member States. Some Member States consider the control of mergers
an important part of government policy and were reluctant
to
cede any of their
powers to Brussels: there was much wrangling about the thresholds of Community
control, the criteria which the Commission should apply
in
permitting or
prohibiting a merger and how far the fundamental principle of ‘one-stop’ control
could be subject to exceptions. There are difficulties inherent
in
the basic tenets of
the Regulation
-
namely, that operations which have effects which cover more
than one Member State should be vetted by the Commission while those having
purely national effects should be left to the authorities in the relevant Member
State, and that operations which are true concentrations should be dealt
with
differently from those which are only forms of co-operation between independent
undertakings. These theoretically simple divisions end up in layers of complexity
about turnover calculations, the meaning of control and the distinction between
concentrative and co-operative operations. Once
it
is found that the Commission
does have jurisdiction, the crucial question is whether the merger will create or
strengthen a dominant position
-
and this involves all the difficulties about
defining markets and assessing market power which are familiar from Article
86.
Lawyers who have had to notify mergers and deal with the Merger Task Force
report that the system works well. The Task Force has shown that it is possible to
have an efficient system of merger control which operates within tight deadlines.
Criticism has come from those
-
inter
uliu,
politicians and some members of the
Commission itself
-
who consider that the application of the ‘is there a dominant
position which will significantly impede competition’ test is not adequate as a
criterion for judging all mergers. They believe that other matters, such as
industrial policy issues, are also relevant. It has been argued that the Commission
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is not the appropriate body to deal with mergers and that a separate body should be
set up for that purpose.
The authors of this book do not rehearse the political controversies, but welcome
the Regulation as a necessary and overdue extension to EEC competition law and
concentrate on its technical complexities and how the Commission dealt with these
in the first two years of its operation. Part I (Christopher Jones) is headed
‘Jurisdiction’ and covers the questions relevant to an assessment
of
under which
jurisdiction a concentration will fall. It also covers the ‘German’ and ‘Dutch’
referral provisions of Article
9
and Article
22(3),
the ‘legitimate interests of the
Member States’ provision of Article
2
1,
the
concentrative/co-operative
problem
and the post-Regulation application of Articles
85
and
86.
It further deals with
territorial issues and the EEA agreement, and briefly covers the September
1991
EC
-
US agreement on co-operation and co-ordination in the application of
competition laws. Part
I1
(also Jones) deals with the substantive issues: whether the
concentration creates or strengthens a dominant position as a result of which
effective competition would be significantly impeded in the common market or a
substantial part of it, and the ancillary restraints issue. In Part 111, F. Enrique
Gonzalez-Diaz goes through the procedure under the Regulation. Nine appendices
at the end include materials such as the text of the Regulation, the procedure
Regulation, the accompanying Notices and Notes, Form CO, the EEC- USA
agreement and extracts from the EEA agreement. The indexing is good and there
is a table giving every decision made under the Regulation up to
10
September
1992.
The book confronts the technical difficulties in the Regulation’s application
head-on, suggesting solutions where possible. For any practitioner needing
guidance as to how the Commission determines the Community dimension
thresholds, this book provides a
full
and detailed account of the calculation of
turnover, including particular difficulties such as joint bidding, asset swaps, part
acquisitions and the rules for special sectors such as airlines and banks. Here, as
throughout the book, illustrations are drawn from the ever-growing case law.
There is an equally useful treatment of the meaning of control and (complete with
flow diagrams) the conundrum of the distinction between concentrative and co-
operative joint ventures. The latter is particularly important because the Merger
Regulation does not just affect the
50
or
so
concentrations a year which come
above the Community dimension threshold: it lays down criteria for distinguishing
between concentrative and co-operative joint ventures generally. Concentrations
below the threshold are to be dealt with by national merger authorities but all co-
operative joint ventures are subject to Article
85.
Lawyers dealing with joint
ventures must therefore look to the Regulation and its accompanying Notice to
determine on which side
of
the line their transaction falls.
When it comes to the substantive test,
67
pages are devoted to a careful
examination of the issues of relevant markets and dominance. The author discusses
not just the merger decisions but also the Article
86
cases, and seems
to
assume
that the principles which have emerged over the years from the latter body of case
law apply equally in the merger context. In contrast to the extensive treatment of
the market power issue, the question as to whether, as a result of the dominant
position, ‘competition would be significantly impeded
in
the common market’
is
given short shrift in just over one page. This reflects the lack of emphasis given to
this part of the test by the Commission, and Jones says (p
166)
that the phrase is
viewed as an integral part of the test of dominance, largely related to potential
entry
of
competitors on to the market.
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