Van Miert acts to end 11th-hour brinkmanship in merger inquiries

Date: 04/02/1999

By Chris Johnstone

COMPETITION Commissioner Karel van Miert is set to clamp down on last-minute brinkmanship by companies battling to win regulatory approval for multi-million-euro mergers.

In a formal notice due to be published within weeks, Van Miert will specify that firms facing in-depth merger investigations should make concessions to anti-trust officials within the first three months of an inquiry rather than waiting until the four-month deadline for the Commission to deliver its verdict is about to expire.

The move is aimed at ending what the Commissioner sees as a common abuse by businesses of his ability to give extra leeway for negotiations to salvage a deal where "serious competition concerns" are deemed to exist.

Competition officials complain that companies have taken advantage of this extra leeway by delaying meaningful negotiations until late in the day and launching 11th-hour talks only once they have created a media bandwagon in support of their deals.

This tactic, they argue, pumps up the pressure on competition investigators, on the 20 Commissioners who must approve Van Miert's decisions, and on national regulators whose opinions on deals must be sought.

The notice will warn companies that recent Commission flexibility in extending the three-month target for negotiations will only be given in future if the firms can prove that "exceptional circumstances" were responsible for the delay.

In theory, the fourth month of an in-depth inquiry is set aside for discussions between national competition experts in the advisory committee on concentrations.

They then give their opinion to the Directorate-General for competition policy (DGIV) as to whether mergers should be blocked or approved and specify any conditions which they believe should be required for clearance.

However, their role has sometimes been sidelined by the tendency for companies to delay talks.

Last-ditch negotiations with the Commission have become commonplace in recent years, with US plane-maker Boeing using the tactic during its battle to win Commission approval for its €14-billion take-over of McDonnell Douglas two years ago.

Negotiations between Commission competition officials and Boeing went so far down the line that the full institution was forced to give its views on the deal before the advisory committee had been consulted.

"This has become a problem," said one national expert. "In the Boeing case, the advisory committee was consulted in writing after the Commission met and gave its conditional approval. That did not really help national governments feel they were playing their part in the process."

German media giants Bertelsmann, CLT-UFA, and Kirch Group attempted to play the same game last year by involving Van Miert in last-minute talks over their plans to launch a digital television joint venture which would have dominated the domestic market.

The ploy backfired when Kirch and CLT-UFA agreed to Commission demands for clearing the deal by offering rival cable firms access to their network, but Bertelsmann eventually rejected the last-minute compromise.