On December 5, 2013, after a public consultation launched in March 2013, the European Commission adopted a package to simplify its review of concentrations under the EU Merger Regulation (EUMR). This initiative was undertaken by the commission to speed up the investigation of mergers at the EU level and to render their notification and review less burdensome for business. In particular, the commission has revised the Notice on Simplified Procedure (enabling a greater percentage of mergers coming within its jurisdiction to benefit from simplified review) and the merger Implementing Regulation (detailing the information required in the context of a merger notification). In parallel, it also updated its model text for divestiture commitments. The new rules will be applicable as of January 1, 2014.

New Thresholds to Qualify for Simplified Merger Review

Any expansion in the use of the simplified procedure is a welcome development for businesses notifying mergers without anti-competitive effects before the commission, as mergers qualifying for simplified review may be notified on a Short Form CO (instead of the more burdensome full form) and benefit from a significant reduction in the amount of information and documents that are required in order for the commission to consider the notification complete. This may also reduce attorneys' fees, as well as the amount of time and resources senior management and commercial staff need to spend on preparing the notification.

The commission has addressed this by changing the market share thresholds that allow concentrations to qualify for a simplified review, as detailed below:

1. "Horizontal mergers" between competitors: If the combined market share of the merging parties does not exceed 20 percent of any relevant market, the transaction will in principle qualify for review under the simplified procedure. The current threshold is 15 percent.
2. "Vertical mergers" between companies active in vertically related markets: If the combined market share of the merging parties is below 30 percent of any relevant market, the transaction will in principle qualify for review under the simplified procedure. The current threshold is 25 percent.
3. For all types of mergers: If the combined market share of the merging parties is between 20 percent and 50 percent and the increment ("delta") of the Herfindahl-Hirschman Index (HHI) resulting from the concentration is below 150, the merger may (at the commission's discretion) be reviewed under the simplified procedure.

The last criterion is newly introduced by the Merger Simplification Package and requires the merging parties to submit evidence concerning the merger's change to the level of concentration in the market. The word "may" suggests that the commission reserves for itself the discretion to decide whether or not a merger falling under this category will be reviewed under the simplified procedure. According to the commission, these changes will allow between 60 and 70 percent of all notified mergers to qualify for a simplified merger procedure, approximately 10 percent more than under the current rules.

Changes in the Information Required During a Merger Notification

The commission has also amended the Implementing Regulation to reduce, clarify, and tailor the information required from companies before and during a merger notification. This is expected to reduce the burden on merging parties to collect data before they notify their merger and speed up the commission's review. Companies notifying transactions that do not qualify for simplified review as described above may yet derive benefits from some of the changes described below, in particular points (iii) through (v).

1. Pre-notification contacts: The commission now considers that simplified merger cases that do not give rise to horizontal overlaps or vertical links in the European Economic Area (EEA) can be notified without pre-notification contacts between the parties and the commission's case handlers. The commission expects this to speed up its merger review process and workload for some deals. It nevertheless remains the responsibility of the merging parties to submit all the required information, and pre-notification contacts are usually useful to assess what is considered necessary by the commission in order for the notification to be considered complete.
2. New super-simplified notification for joint ventures active outside the EEA: The commission has introduced a new notification form for joint ventures that meet the EUMR thresholds by virtue of their parents, but that are active entirely outside the EEA. Now, parties only need to describe the transaction, specify their business activities, and provide the turnover figures needed by the commission to establish jurisdiction.
3. New market share thresholds for "affected markets": In standard, non-simplified merger reviews, the commission requires very detailed market information and analysis for "affected markets." The thresholds of what constitutes an "affected market" have been raised to a combined market share of 20 percent (from 15 percent) for horizontally affected markets and 30 percent (from 25 percent) for vertically affected markets, mirroring the expansion of the scope of the simplified procedure.
4. Individual waivers: The Form CO and Short Form CO now clearly identify categories of information for which merging parties may wish to request an individual waiver. Requests for individual waivers are made during the pre-notification contacts, allowing merging parties to notify without having to compile extensive information, which is formally required but is not relevant to the individual case. These requests are usually addressed within five working days.
5. Pre-notification referrals, Form RS: The amount of information to be submitted by merging parties requesting to have their case referred to a member state from the commission or vice versa has been reduced. It now mainly focuses on the geographic scope of the relevant markets and the nature of the transaction.

Updated Model Text for Divestiture Commitments

In parallel to its Merger Simplification Package, the commission has updated its standard model text for divestiture commitments. The standard model text is now aligned to the revised notice on remedies adopted in 2008. Merging parties can offer commitments to remove the competition concerns raised by the commission during a merger review. Although the use of the standard text is voluntary, it provides for a useful model to design commitments to divest assets and for the appointment of a monitoring trustee.