Companies call for Commission to take on more merger powers

Date: 27/01/2000

By Peter Chapman

EU BUSINESS leaders are call-ing on the European Commission to push for more powers to vet mergers and acquisitions, amid claims that companies are suffering from "regulatory overkill" at national level.

The demand from the European employers' organisation UNICE comes in response to a letter from Competition Commissioner Mario Monti asking firms whether the thresholds above which deals are investigated at EU level should be lowered.

Under the current rules, which were last amended two years ago, decisions on whether mergers and acquisitions should be vetted by the Commission or member state regulators are made on the basis of the levels of sales enjoyed by the firms involved in Union and national markets.

But UNICE, backed by the UK's Confederation of Industry (CBI), wants the rules changed to allow the EU executive to probe more deals. The European group's company affairs advisor Erik Berggren said firms "preferred the 'one-stop shop' offered by the Commission's merger task force". This was echoed by the CBI's legal advisor Jonathan Dykes, who said: "There is growing evidence that the multiplication of national merger-control authorities in recent years is causing problems for businesses involved in cross-border transactions."

Supporters of more EU-level investigations say one of the key problems with the current set-up is that regulators in several member states tend to probe mergers on the basis of the turnover of large companies engaged in take-overs, even if the target firm's sales are negligible.

Moreover, even the very smallest mergers may require approval by several national regulators, a process which can take up to six months.

Under the existing rules, deals are generally investigated by the Commission if the companies concerned have a combined aggregate turnover of €5 billion and at least two of the firms involved have EU sales of €250 million, two thirds of which are not concentrated in one country.

Other deals can also be vetted at Union level but only if they meet lower but far more complex 'secondary thresholds' which were grafted on to the previous merger rules in 1998.

Under these regulations, the Commission would probe a newly-merged company with a global turnover of €2.5 billion if the firms involved had specific turnover levels within the Union.

The CBI claims these new thresholds still "fail to catch a sufficient number of transactions more suitable to be dealt with at EU as opposed to member-state level", and should therefore be reduced.

It is calling for the 'secondary threshold' for triggering Commission investigations to be lowered, with the requirement that two of the firms involved in a deal must have sales above €25 million in at least three member states reduced to €15 million and the stipulation that at least two of the merging

companies should command EU-wide sales of €100 million cut to €50 million.

Monti's spokesman Michael Tscherny said this week that Commission officials had "no preconceived ideas" about whether to risk a clash with governments by seeking to take control of some merger probes which currently fall within member states' remit.

EU business leaders are calling on the European Commission to push for more powers to vet mergers and acquisitions, amid claims that companies are suffering from 'regulatory overkill' at national level.