Monti seeks to cut down on ‘horse-trading’ in merger cases

Date: 24/02/2000

By Peter Chapman

COMPETITION Commissioner Mario Monti will publish guidelines next month setting out his staff's approach to merger investigations and the concessions likely to be required from firms seeking approval for troublesome deals.

The move is aimed at reducing the time companies spend 'horse-trading' with the Commission's merger task force as they seek to identify concessions which will allay competition fears while keeping the logic behind the original deal intact.

Although the guidelines will not tell firms precisely what they must do to win clearance for planned mergers, experts say they will end doubts over the institution's approach to such deals - allowing companies and their lawyers to plan ahead.

In the draft 'notice' due to be published in March, the Commission says it will consider each deal "on a case-by-case basis". But it adds that concessions aimed at "restoring the status quo" in the market before the deal was struck - typically asset sell-offs - are "the most effective way" to eliminate competition fears where concerns are raised by an overlap of activities in the same market.

The paper states, however, that other solutions might be found in cases where asset sales would not be possible, such as where merged firms would benefit from "combinations of key patents" or trademarks. Here, firms may be called upon not to use those trademarks or patents for a certain period, or to make production capacity available to rival companies.

The proposals are the latest in a raft of measures aimed at making EU merger policy more transparent and updating existing rules.

Officials are currently finalising work on another 'notice' which will set out plans to simplify the procedures for clearing 'run of the mill' deals which pose no threat to competition.

They are also preparing a paper which will explain the Commission's tough approach to 'ancillary agreements' between firms which fall short of full-scale mergers.

These include strict three-year time limits on the duration of 'non compete' clauses between companies which have agreed to co-develop products, or to sell each other the right to use patents or 'know-how'.

Erik Berggren, competition expert with European employers' federation UNICE, welcomed the Commission's efforts to explain its policy in the competition field more clearly.

"Such notices provide guidance to the industry - and that is good - even if they do not always say what we think they should," he said, adding: "Companies need certainty."

Meanwhile, Monti and his officials are still consulting industry on whether there is a need to change the EU sales thresholds which trigger Union-level merger probes.

Organisations such as the UK's Confederation of British Industry and the American Chamber of Commerce have already told the Commission they would like it to rule on more of the merger cases which are currently handled by national authorities.

Competition Commissioner Mario Monti is to publish guidelines setting out his staff's approach to merger investigations and the concessions likely to be required from firms seeking approval for troublesome deals.