European Merger Control: The Commission That Have a Community Dimension


On the 1st of January 1958, within the bounds of the Treaties of Rome on the creation of the European Economic Community came into effect article 85 and 86. Those articles make it “illegal for companies to enter into agreements that restrict or distort competition with the European Union, that is, by means of price fixing or agreements over market share” and exploit consumers using the firm’s dominant positions in the general market. For the last 50 years these articles have witnessed a major evolution in the sphere of competition law, in which the regulation and control of mergers and acquisitions had a lot to do with such evolution.

The move toward a unified European market has accelerated the development of European competition policies, and at the same time the absence of a European law on mergers and acquisitions was substantially hindering the policy of the European Community (EC). In that regard, despite the long history of failed negotiations over merger regulations, the Merger Regulations were passed with relative ease after the draft of the commissioner Sir Leon Brittan of Great Britain was adopted into Merger Regulation 4064/89 on December 1989 (Wilson). Although the control over mergers and acquisitions is a story with varied success, it is nevertheless important in the context of globalization. In that regard, this paper critically analyzes the case of European mergers and European Merger Control, in terms of the power of the commission and the concept of control in regulations.

The rationale of Merger Control

The rationale of merger control can be seen in the great opportunity given by the single European market (SEM) to engage in cross borders mergers. In that regard, it can be stated that there are several areas in which the regulations’ main authority of control are specifically emphasized.

Regulation of Dominance. The role of merger control is complementary to the overall purpose of the competition law, i.e. prevention of monopoly and the enforcement of free and fair competition between companies. Accordingly, it can be stated that one of the main features of merger regulation is controlling dominance. Dealing with merger cases with Community dimensions was the responsibility of a separate department within the Competition Directorate General of the European Commission (Competition DG), called Merger Task Force (MTF) (Buch-Hansen 222). In that regard, the MTF has the authority to block mergers, which resulted in the creation of a dominant position in the market (Buch-Hansen). The assessment of dominance according to 1989 Merger Control Regulation (MCR) is based on the dominance definition, where Art 2(3) of MCR defines it as:

A concentration that creates or strengthens a dominant position as a result of which effective competition would be significantly impeded in the common market or in a substantial part of it shall be declared incompatible with the common market (Buch-Hansen 222)

Accordingly, it should be mentioned that there are distinctions between various positions of dominance, and thus, several aspects subject to controversy should be outlined. One of such aspects is the distinction between dominance and the abuse of dominance, where the provisions of the EC treaty clearly indicate the latter. However, the existence of such a position can be considered as a prerequisite for the application of Article 82 of the treaty, which prohibits any abuse of dominant position. Another aspect is related to the definition of markets within the concept of dominance. In that regard, the aforementioned “can be extremely difficult and controversial, as market definition is often the deciding factor in the approval of a merger, and firms and the Commission often disagree on this point” (Buch-Hansen 223).

Taking the case of the merger between Nestle and Perrier, a landmark case of merger in the European context, the commission chose not to review the newly formed position of the merged companies within the French bottled water market, rather than examining the impact of the merger on “the structure of the French bottled water market as a whole” (Davison and Fitzpatrick 14). The assessment indicated a possibility of creating a duopoly in the market, according to which the merger was not allowed by the commission, unless it received undertakings from Nestlé and BSN about business divestments” (Davison and Fitzpatrick 14) In that regard, it can be stated that mergers leading to collective dominance in and the creation of oligopolistic markets were one of the concerns of MCR. Accordingly, the latter was also a cause for criticism as well, as in the case of the merger between Nestle and Perrier, that there was no legal basis for blocking mergers on the basis of oligopolistic dominance. Thus, the aforementioned case was the first in setting a precedent in identifying collective dominance. The interpretation of collective dominance from the Nestle-Perrier case, France v. Commission, Gencor v. Commission, to the case Airtours implied a degree of freedom for the commission to differentiate the control process, rather than following a single standard over time.

Collective Dominance. The concept of collective dominance can be defined as the situation “in an oligopolistic market where a small amount of firms each have high market shares, without being individually dominant” (LITZELL 36). The effect of mergers can be seen in that after a merger “the firms are able to compete less strongly with each other in the market… [due to that] the merged entity having a larger combined market share,…[enabling] two or more firms to achieve and maintain a “tacit understanding” not to compete effectively and thus increase prices” (LITZELL 36).

The concept of collective dominance is largely linked with the case of Nestle and Perrier, being the case setting a precedent in the history of regulations’ development. Prior to the case, despite the fact that the treaty of EC indicated the abuse of a dominant position, the provisions of Mergers Regulations did not. Nevertheless, the Commission established the applicability of the case to the regulations, namely anti-competitive behaviour, regardless if it was of collective dominance or single dominance.

In that regard, it can be stated that the amendments introduced in 2004 with the introduction of “substantial lessening of competition test” (Van Bael & Bellis (Firm) and Van Bael 1), although would not have changed the decision in Nestle/Perrier, they improved the assessment process, scrutinized by Community Courts. In that sense, Airtours can be seen as another landmark case, which collective dominance the commission failed to prove.

Thus, with the new assessment, the Commission is capable of taking all relevant factors in consideration, focusing on important dynamic factors and filling an existent gap in the merger dominance test. The existent gap is relevant to the cases non-collusive oligopolies, i.e. the cases in which the merger would not result in a dominant position in either single or collective form, but nevertheless allow the formed merger to exercise anti-competitive behaviour.

Thus, the new test extended the case law scenarios set by precedents to include such cases in regulation. It should be stated that the analysis of the current practices of merger control enforcements suggests that the focus on dominance is still in effect, where the new test is only helpful in clarifying the cases of non-collusion oligopolies defined earlier (SVETLICINII).

Modifying Mergers

The modification of mergers can be seen in the concept of applying remedies in order for the merger to be approved. The latter can be considered as common practice, in which a considerable proportion of the mergers reviewed by the EC are approved after remedies have been offered” (Motta 265). In that regard, it should be stated that the approaches of the EU in remedies policies are similar to those of the US, which can be understood as the main concept of control shifted from the German model to the American, namely the consumer welfare, approach, originally developed by the Chicago School of antitrust analysis.

In that regard, remedies can be categorised into structural remedies, modifying the allocation of rights, and behavioral remedies, i.e. setting constraints of the merged firms’ property rights consisting of “engagements by the merging parties not to abuse certain assets available to them, or enter into specific contractual agreements” (Motta 266).

Following the case of Nestle and Perrier, it can be seen that the proposed remedies in the case, which were divesting measures of the parties, selling parts of the formed merger to a third independent company, are related to structural remedies. The latter is considered as natural remedy solving the problem of anti-competitive effects of mergers, in which assets are bought or acquired by a new firm or an existent competitor so that these assets allow the buyer to act as a viable competitor in the market.

Behavioral types of remedies imply making commitments which ensure a level playing field in the purchase or in the use of the assets. It can be seen that the power of the Commission to modify extends to behavioural remedies as well. An example of this can be seen in cases such as the merger of Vivendi/Canal+/Seagram, in which the Commission rejected the proposal of the parties, leading to the rejection of granting Canal+”first-window” rights (Motta 268).

Other cases include the Lufthansa/SAS merger, which took a semi-structural form due to contractual agreements authorised by the Commission for the companies to be subject to certain conditions for a period of 10 years. It should be noted that the nature of behavioural remedies implies constant monitoring process on those remedies to be followed, after the merger was cleared.

The Concept of Control

Assessing the concept of control in mergers regulations, the main ideas that can be assumed from the provisions of competition laws are related to assessment, remedy and enforcement. In that regard, even through several decisions of the commission were annulled in the European court, e.g. Airtours case, the control of mergers can be considered as one of the most stable spheres of application of European law. Accordingly, the concept of control is of interpretive nature itself, as are the terms on which it relies.

The assessment aspect of merger control is of major importance, which implies having the specific powers for making such assessment as well as having exclusive competences to make such assessment (Davison and Fitzpatrick). The latter was specifically outlined in the new merger regulations, which came into force in 2004. These powers were related to both Regulation on Procedure and the Merger Regulation, in which the commission was given “the power to conduct inspections, announced or unannounced, of the companies’ premises” (Van Bael & Bellis (Firm) and Van Bael). The examination includes business records, extracts form business records, oral explanations, books, and others. In that regard, the rationale beyond such powers can be seen in making the assessment procedure as competent as possible.

Taking the issue of assessment to the case of Nestle and Perrier, the assessment included analyzing the characteristics of the products in question, i.e. mineral water and soft drinks, the differences of the market, and a quantitative analysis of the prices. Accordingly, it should be noted that the powers given to the EC would not have changed the decision on Nestle and Pierre, which can be true in the case of using a different test methodology. The exercise of power in conducting investigative and assessment procedures implies general market analysis, rather than on companies’ future decisions.

The aspect of remedy, as an essential element of control in merger regulations, is largely linked to the Commission’s power to conduct the assessment. Based on such assessment the Commission is able to predict the likely outcome of the remedy on the merger, i.e. analysis the shares of market as well as the capacities of the companies with the remedy applied. In that regard, the interpretive nature of the remedy is also of major focus as with the merger not completed, the remedy is to eliminate the competition concern in advance.

Finally, the aspect of enforcement can be seen in blocking the mergers’ cases and the imposition of fines for infringements and not complying with the procedural requirements. It can be seen that the main aspect in all of the aforementioned can be considered the assessment process, which at the same time were the main debatable issues in the course of establishing and amending the regulations of mergers.


In conclusion, it can be stated that European Merger Regulation Law has witnessed an evolution process along with Competition law in general. The establishment of merger regulations in 1990 and the subsequent improvement in 2004 indicate significant epochs in such an evolution process. Although the main features of the law and the power given to control mergers did not change substantially, it can be stated that the main accomplishment is in shifting regulation for the phase of learning toward a structured approach, applicable to different cases of the merger.


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DemoEssays. "European Merger Control: The Commission That Have a Community Dimension." February 24, 2022.