Hiding in plain sight? Reviewing big tech deals and "killer acquisitions" without amending jurisdictional thresholds

In an important speech, the European Competition Commissioner has signalled a change to a long standing policy in relation to referrals of deals to the Commission. The Commission has been giving consideration to changing its turnover thresholds, like Germany has, to deal value thresholds given concerns that digital deals and so called "killer acquisitions" of nascent competitors by, in particular digital or big pharma incumbents are escaping review given lack of, or small target turnover. However in her recent speech the Commissioner indicated that the answer was "hiding in plain sight" and that in a significant change to its existing policy, the Commission plans to start accepting referrals from national competition authorities of mergers that are worth reviewing at the EU level – so called "Article 22 referrals up", whether or not those authorities had the power to review the case themselves.

Again, significantly, whilst the Commissioner had indicated in her speech that "this won't happen overnight" and time was needed for companies to adjust to the changes and for guidance to be put in place so that the new policy would take effect around the middle of 2021, at a conference late last week a senior Commission official refused to rule out more immediate changes, given the legislation already permits referrals up by member states lacking jurisdiction under their own rules. This is a remnant of the fact that at the time the original European merger regulation was implemented in 1990, the Netherlands did not have merger legislation and so the referral procedure did not require member state jurisdiction for the Commission to accept a referral up. Despite the fact that all 27 member states have merger control legislation, the EUMR has not been amended.

This is a very significant signal from the Commission and one which means that companies need now, via SPA conditionality and long stop dates; to reflect the possibility that deals with no or member state only conditions will become European Commission cases (with consequent changes to process and timetable). To date, referrals up have been relatively rare - there have been only 9 cases or 0.5% of the 1855 notifications made to the European Commission between 1 October 2015 and 1 October 2020.

Whilst the other criteria of Article 22 still need to be met namely, that a concentration "affects trade between member states" and threatens to "significantly affect competition within the territory of the state/s making the request"; the first criterion has been very flexibly applied; permitting review of transactions with wholly national markets; and the second criterion may well be a low bar in cases in which a transaction is said to remove a nascent or potential competitor (given the way in which these cases have been prosecuted so far).