2023 EU merger control reforms: simplification or trap for the unwary?
14 September 2023
14 September 2023
On 1 September 2023, the much-anticipated EU merger notification "simplification" package finally came into force. Following two rounds of consultations, the European Commission has issued new long and short notification forms (Form CO) and issued revised guidance on when the so-called simplified procedure can be used.
Touted as cutting "red tape", the reform package introduces new "tick-the-box" sections in notifications, increases the cases in which a short Form CO can be used, and gives the European Commission greater flexibility to require the long form and 'normal' procedure even in transactions with low market shares. Digital notifications are also set to become the norm.
While the reforms do introduce new streamlined procedures for certain categories of cases, there are also expanded information requirements and nuances that will require careful attention from dealmakers and advisors.
Under the new rules, a broader range of transactions will be eligible for simplified review. However, the European Commission retains discretion to revert to the normal procedure in a number of cases.
Cases eligible for a new super simplified review, with no pre-notification required:
Cases eligible for a simplified review (largely as before):
The European Commission has the discretion to allow transactions to be reviewed under the simplified procedure using the so-called "flexibility clause" where:
There is also the possibility of "hybrid" treatment where some markets meet the criteria for the simplified procedure while others do not.
The European Commission has the ability to revert to the "normal" (or non-simplified) procedure where one or more of a long list of safeguards or exclusions are met. The list of safeguards and exclusions (which parties must address in Section 11 of the notification forms) include cases where:
Parties need to confirm whether any of these criteria apply ("yes or no" tick box format) and to explain why, despite these factors, the case should still be treated under the simplified procedure and does not give rise to concerns.
The Section 11 list is not exhaustive, with the Simplified Notice referring to a number of other circumstances where the European Commission may see fit not to apply the simplified procedure, including where:
The new short Form CO (and to some extent, the long Form CO) now includes a substantial tick-box element, with parties required to select "yes" or "no" for a long list of questions relating to the structure of the transaction, jurisdiction and substantive assessment.
While this may simplify presentation of information in notifications, there are a few notes of caution when considering to what extent this really "cuts red tape" for companies. In particular:
Parties must also describe the usage of this data: e.g., "internal datasets produced" based on the data as well as "internal reporting products and analysis such as business strategy, market plans, investment plans, market intelligence and competitors' [sic] monitoring".
Although this requirement overlaps with typical requests for information in more complex cases, the level of detail required for (apparently) all filings that do not benefit from the simplified procedure is new. Larger corporations with activities in multiple jurisdictions will inevitably find this challenging. Preparing a complete answer will require early and extensive preparation as well as the retention, in many cases, of specialised economic consultants.
For several years, attempts have been made to reduce the physical and environmental burden of paper submissions with increased use of digital submissions. This trend gathered pace during the Covid-19 pandemic and has now been formalised in the 2023 simplification package.
Digital notification is now the default and parties are required to sign key documents electronically, using qualified electronic signatures (from specific approved providers).
The 2023 simplification package's impact should not be overstated. While it will clearly cut red tape for the simplest of no-issue cases and the new possibilities for simplified review are welcome, complexities remain.
As ever, careful preparation, data gathering, and engagement with the European Commission will be needed to avoid unpleasant surprises. At least initially, pre-notification is likely to become even more important, as parties, advisors, and the European Commission acclimatise to the new forms, information requirements, and exclusions / safeguards. Highlights for deal makers and advisors to bear in mind are:
The information provided is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to.
Readers should take legal advice before applying it to specific issues or transactions.