In Case C‑449/21 (“Towercast”) (currently pending), the European Court of Justice (the “ECJ”) was required to assess and rule upon a preliminary question of whether a concentration which does not meet the relevant turnover-related thresholds of Regulation (EC) No 139/2004 (the “Merger Regulation”) and national merger control law and, as a result, did not undergo ex ante assessment with any national or European authority can be reevaluated following its completion in view of Article 102 from the Treaty on the Functioning of the European Union (the “TFEU””) on abuse of dominance.
In other words, the question raised by the inquiring national court (in this case, the Court of Appeals in Paris, France) opened the discussion as to whether a concentration which, at first sight does not even raise the issue of clearance (by not meeting the legal notification thresholds), may trigger additional ex post review based on legal grounds concerning abuse of dominance.
Advocate General Kokott issued their opinion in this case[1] and their conclusion is that indeed, such review could take place. The arguments brought forward in this regard are in brief the following:
applying national law provisions or the Merger Regulation with respect to clearance requirements for mergers does not preclude the application of Article 102 on abuse of dominance following the completion of the concentration, given the prevalence of treaty provisions. However, to the extent that a concentration meeting the thresholds for notification has been declared compatible with the internal market, “could not as such be qualified (any longer) as an abuse of a dominant position within the meaning of Article 102 TFEU, unless the undertaking concerned has engaged in conduct which goes beyond that and could be found to constitute such an abuse.”[2]
subsequent control under Article 102 TFEU can only concern concentrations carried out by an undertaking with a dominant position.[3]
legislation on merger clearance establishes a rebuttable presumption that, in case certain thresholds are met, a proposed concentration may raise competition concerns and, hence, require the preliminary review of competition authorities. However, lack of reaching such thresholds (and absence of the presumption) does not preclude Article 102 from applying and the relevant competition authority from assessing post concentration completion if abuse of dominance occurred.
in order to effectively protect competition, especially in acquisitions in highly concentrated markets, competition authorities should be able to use the tool made available by Article 102, where the aim of such acquisitions is to eliminate competitors (the so-called killer acquisitions - more on the concept here).
The case is still pending and the ECJ is yet to rule on it. However, if the Court's judgment follows AG Kokott's opinion and reasoning, it would probably require a partial reconfiguration of how some purchases will be dealt with, in the context of which the notification thresholds are not met:
the standard assessment of notification thresholds carried out before any deal is signed will have to be followed by an assessment of the potential abuse of dominance resulting from the concentration. The absence of such extensive assessment could lead to negative consequences after the completion of the M&A in the form of fines or the retroactive dismantling of the transaction. In her Opinion, AG Kokott suggest that the adequate sanction would not be the dismantling of the transaction (given the primacy of behavioral remedies and the principle of proportionality), but “only” the imposition of fines[4]; and
the agreements that give effect to the acquisitions (sale purchase agreements (SPAs)) will either have to contain warranties as to the absence of grounds of post-closing abuse of dominance, to the extent that a finding of such abuse would result in the dismantling/termination of the transaction.
Article to be continued based on the expected ECJ decision.
[1]https://curia.europa.eu/juris/document/document.jsf?text=&docid=267143&pageIndex=0&doclang=EN&mode=lst&dir=&occ=first&part=1&cid=44949 [2] Paragraph 60 of the Opinion of Advocate Kokott delivered on 13 October 2022 in the “Towercast” case (the Opinion). [3] Paragraph 62 of the Opinion. [4] Paragraph 63 of the Opinion.