Despite the pandemic, the EU Commission has been as busy thus far in 2020 as it was in 2019, looking at all merger decisions issued; but the number of significant EU investigations remains low by the standards of previous years. The EU Commission concluded six significant EU merger investigations in Q2 2020, bringing the total number for H1 2020 to 11. This is in line with H1 2019 and on pace to match the number of significant investigations observed in 2019. As observed in the DAMITT 2019 annual report, however, that year saw the lowest number of significant investigations over the past five calendar years. The pattern of fewer significant investigations in 2019 and continuing in H1 2020 does not appear to be due to any slackening of enforcement intent; instead, it may be a reversion to the mean after a few years of exceptionally high levels of significant investigations.
Three of the six significant EU merger investigations resolved in Q2 2020 were cleared with remedies, all in Phase I. Two Phase II investigations were terminated following the parties’ withdrawal of their notification (Boeing/Embraer and Johnson & Johnson/TachoSil). The remaining Phase II case was cleared unconditionally. This H1 2020 total already matches the highest number of withdrawals in any year during the 2011-2019 period tracked by DAMITT. At the time of publication, the Commission had already issued one more Phase II decision and there are six ongoing Phase II investigations, including LSEG/Refinitiv Business and EssilorLuxottica/Grandvision. Absent any unexpected delays in some reviews, the number of Phase II cases resolved in 2020 should be in line with the average of eight Phase II decisions per year observed since 2011.
As explained in the DAMITT Q1 2020 report, early on in the pandemic the EU Commission, in line with a number of agencies worldwide, took steps to manage the flow of new cases. The EU Commission asked parties to postpone non-essential notifications, since it anticipated difficulties in collecting information from third parties for market-testing purposes, and in staff remotely accessing information and databases. There has not, though, been any sharp downward inflection in activity, with remote working arrangements for officials functioning effectively.
The number of all cases resolved by the EU Commission in H1 2020 corresponds to 48 percent of the number of decisions adopted in the entire FY 2019. Unlike the significant decline in the U.S., the total number of EU notifications in H1 2020 (169) was down by only about 10 percent compared to the same period in 2019. These reductions are no greater than variations observed from one year to another in the past. The limited impact may be a function of the fact that the large majority of cases reviewed by the EU Commission are short form/simplified cases (i.e., cases that do not require extensive market investigation). As such, they are less likely to have been postponed. Down the line, however, the delays triggered by the pandemic may have a stronger impact on the number of significant EU investigations, reinforcing the downward trend observed since 2019, as well as on their duration.
By way of comparison, there has been a steeper decline – of around 30 percent – in the number of transactions notified in Germany in H1 2020 compared to the same period in 2019. Because, unlike in the EU, parties are not required to engage in pre-notification discussions with the German Federal Cartel Office, the time lag between announcement and notification is limited and it is therefore possible that, later in the year, the EU may follow the trends observed in Germany and the U.S. with regard to the number of notifications.