The Commission Offers Insight Into The Examining Of Below-threshold Transactions

• Published date: 06 September 2023
• Subject Matter: orporate/Commercial Law, Antitrust/Competition Law, M&A/Private Equity, Antitrust, EU Competition
• Law Firm: Kromann Reumert
• Author: Mr Jens Munk Plum, Carina Czerwinski Dall and Simon Emborg Kristensen

Recent years have seen an increasing focus, from the Commission and national competition authorities alike, on also catching and examining mergers that are not automatically notifiable because they do not meet the turnover thresholds. One of the tools available to the authorities for capturing such mergers is an increased use of Member States' powers for referring mergers that would not otherwise be notifiable, neither to the Commission nor nationally, and the Commission has recently published a set of Frequently Asked Questions and Answers (Q&A) to help clarify the significant change of practice. Moreover, and somewhat surprisingly, the Advocate General has opined, in the Towercast case, that even below-threshold mergers may in certain cases be assessed under the abuse-of-dominance rules, thus challenging a longstanding practice to the contrary (see link to previous newsletter at the end of this article).

1. Merger control thresholds

Transactions must be notified to the competition authorities if meeting certain statutory thresholds. In most cases, these thresholds mean that transactions must be of a certain volume to be notifiable. The Danish thresholds require, among other conditions, that at least two of the merging entities have an annual turnover in Denmark of at least DKK 100 million, and that the combined annual turnover of the merging entities is at least DKK 900 million in Denmark. For a transaction to be notifiable to the European Commission, the economic thresholds are significantly higher.

Article 22 of the Merger Regulation, however, introduced a sort of emergency mechanism, in the form of a call-in access, allowing for one or more Member States to refer a transaction to the Commission even though it does not meet the EU thresholds. For a national competition authority to refer a transaction to the Commission, that transaction must be capable of affecting trade between Member States and must also pose a considerable risk that competition within the referring Member State(s) will be significantly affected.

2. The commission changed its practice

The Article 22 referral mechanism was originally intended to provide a sort of emergency access for those Member States that did not have merger control regimes of their own. As more and more Member States have implemented national rules, Article 22 has come to serve (to a limited degree) as a supplementary mechanism in its own right - also in Member States with merger control regimes of their own...