EU competition regulators agree guidelines for cross-border cooperation

The Commission said that NCAs from across the EU had agreed a set of 'best practices' to be followed in "multi-jurisdictional" merger cases. The NCAs published agreement said that, whilst sharing basic information about cases is useful, "further cooperation" was not always "necessary".

"While it is always useful for NCAs to provide basic case information to each other in merger cases which are notifiable in more than one member state, further cooperation will not be necessary, or even efficient, in the case of every multi-jurisdictional merger," the NCAs' best practice agreement (8-page / 314KB PDF) said.

"This is particularly the case where it is clear during the early stages of an investigation that the merger does not raise any significant competition or procedural issues in any Member State or that it does so only in one member state, or where such issues are not decisive for the outcome of any of the different merger reviews," it said. "Close cooperation is not an end in itself: its benefits depend on the specific circumstances of each case. Where multi-jurisdictional mergers raise similar or comparable issues in relation to jurisdictional or substantive questions, the NCAs concerned will decide on a case-by-case basis whether cooperation may be necessary or appropriate."

Under the best practice agreement NCAs will share basic information with other authorities if a merger is also "reviewable" in that country. NCAs will then update those authorities with details of "any decision to commence second phase proceedings/in-depth investigations, and any final decision, including a decision with remedies," the agreement said. The NCAs also agreed to generally keep other authorities up to date at "key stages" in merger reviews.

Major merger or takeover deals involving companies with big turnovers are generally ruled on by the European Commission using its Merger Regulation. In some cases, though, decision-making powers are handed back to national regulators so they can find suitable solutions to avoid an uncompetitive market.

Under the Merger Regulation NCAs have jurisdictional rights to assess prospective mergers if more than two thirds of each merger party's EU-wide turnover is generated in that member state. Other circumstances also allow NCAs and the Commission to reallocate control over merger deals.

Merger deals involving companies below the Merger Regulation turnover thresholds are assessed by NCAs according to similar criteria. In the UK mergers and takeovers are currently assessed by the Office of Fair Trading (OFT) if a combined enterprise will have a UK market share of at least 25% or if a company being bought over has a turnover of more than £70 million.

The NCAs' best practice agreement states that cooperation between authorities can help achieve "non-conflicting outcomes" when the authorities are assessing mergers that also affect other EU countries. It also calls on companies seeking a merger to "provide full and consistent information to NCAs concerned" to help the authorities better cooperate.

"Where the merging parties provide full and consistent information to NCAs concerned, cooperation can reduce burdens on merging parties and third parties by facilitating, where possible, the alignment of timing and the overall efficiency, transparency, effectiveness and timeliness of the merger review processes," the NCA's best practice agreement said.

"In cases where serious concerns or difficult analytical issues arise, cooperation can be invaluable in helping to reach informed and consistent or at least non-conflicting outcomes. In such cases, cooperation will ensure that NCAs are in a better position to exchange views on, for example, possible conceptual frameworks for the assessment of the transaction and theories of competitive harm, types of empirical evidence and so on," it said.

Cooperation can also ensure any "remedial action" they ask prospective merging companies to undertake in order for deals to be completed is consistent with action called for in other states, the agreement said.

"Remedies in a merger that is reviewable in more than one jurisdiction may differ across jurisdictions depending on the competition concern identified in each one; indeed, remedies may not be necessary in every jurisdiction," the agreement said.

"Nevertheless, where the merger affects a market or markets in more than one jurisdiction, a remedy accepted in one jurisdiction may have an impact in another jurisdiction. Cooperation can therefore contribute to avoiding inconsistent remedies and obtaining those that are more coherent," it said.

The agreement also sets out rules on information sharing confidentiality and the kind of details merging parties should provide to NCAs as part of the notification process in potential deals.

Under the Merger Regulation and most national laws across the EU companies can be issued with sanctions, typically in the form of fines or improperly completed transactions being declared void, if they do not notify the competition authorities and gain their clearance before merger deals are completed.

"The EU merger control system is one of the EU's success stories making sure that consumers benefit from products and services to choose from at competitive prices whilst allowing companies to get their mergers reviewed swiftly, opening them the door to a market of 500 million," Joaquín Almunia, European Commission Vice President and Competition Commissioner, said in a statement.

"But companies also want to see more cooperation among national competition authorities and more convergence in their approach to merger control and these Best Practices will deliver just this," he said.