Van Miert fails to convince sceptics on merger powers

Date: 04/04/1996

By Chris Johnstone

COMPETITION Commissioner Karel Van Miert's battle to win more powers for his merger task force is turning into a marathon battle for a more modest prize.

Member states made it clear this week that a charm offensive by DGIV, the Directorate-General for competition, over the last two weeks has failed to win sufficient support for Van Miert's main proposal to lower dramatically the turnover thresholds which trigger merger task force investigations.

With negotiations now set to stretch into the summer and beyond, it looks increasingly likely that Van Miert will have to compromise.

Commission merger investigations are currently launched when company link-ups have a world-wide turnover of at least 5 billion ecu and the EU turnover of at least two of the companies involved is more than 250 million ecu.

Van Miert wants to widen Commission scrutiny by slashing the turnover ceilings to 2 billion ecu and 100 million ecu respectively. This would add between 65 and 80 cases a year to the Commission's workload.

The latest consultative Green Paper on Community merger control is the Commission's second attempt to obtain extra powers. The first, in 1993, was shelved as worthy but untimely amid heightened national sensitivity over subsidiarity and sovereignty.

While Italy and the EU's smaller states are said to be in favour of the plan, France, the UK and Germany - who together have enough votes to form a blocking minority - maintain Van Miert's main proposal for cutting the thresholds is too ambitious.

“We are still sceptical and so are most other countries,” one national expert said after a meeting between national and Commission officials.

Germany is holding out for an independent European cartel office, while France and the UK simply argue that Van Miert wants too much power.

However, despite their critical initial responses, the 'big three' say they are still willing to discuss the issue further and that Van Miert's fall back proposal for the task force to expand its powers by taking on multiple notifications, mergers and take-overs presented to more than one national authority for clearance has some chance of succeeding.

The key question that needs to be settled is the definition of a multiple notification.

Germany, France and the UK say the Commission will probably have to backtrack from its official position that a deal vetted by two national authorities should be handled at Community level because it has significant cross-border effects. They argue member states can handle cases where only two authorities are involved through normal bilateral channels. But they concede that a Community role could be justified when three governments are involved. “There is more sympathy for this point of view,” said one national official.

The Commission is not expected to quibble too much over the numbers as it prepares more detailed proposals on merger regulation reform this month, amid reports that the college was far from unanimous when the decision was originally taken to define 'multiple' as two national notifications.

Van Miert is credited with improving his chances of seeing his efforts rewarded by combining a bid which asks for far more than he was ever likely to get with a face-saving fall back.

“I can imagine he will get something this time, but not all that he is asking,” said an official from a 'sceptical' member state.

DGIV justifies its call for wider powers on the grounds that many significant mergers and take-overs which have an impact across Europe are currently escaping its scrutiny.

Officials argue that vetting is insufficient in a number of key areas, including drugs, chemical, auto components, mechanical engineering, biotechnology, paper products, and publishing. Only 16&percent; of all chemical and pharmaceuticals deals, for example, are currently put before the Commission.