Best practices on cooperation between national competition authorities in multijurisdictional merger cases

On 8 November 2011 the national competition authorities of the European Union (‘NCAs’) have agreed among themselves a set of guidelines for the review of the so-called ‘multiple filings’, i.e., mergers that do not have a Community dimension within the meaning of the EC Merger Regulation but are subject to notification in more than one Member State¹.

Cross-border mergers that require clearance by several NCAs often entail considerable challenges for NCAs and businesses alike, particularly in terms of legal certainty, costs and time delay. The to alleviate the difficulties arising from multiple filings, identifying the type of cases in which NCAs should cooperate, the stages at which they should do so and the information they may share.

These best practices do not envisage cooperation in all multijurisdictional mergers. NCAs retain the power to decide on a case-by-case basis whether the review of a certain merger should benefit from closer cooperation. The general principle for triggering the cooperation mechanism is the existence of similar or comparable issues of a jurisdictional or substantive nature in two or more Member States in respect to a given merger. The best practices present several examples where such cooperation would be advisable at different stages: at the notification phase, to help NCAs decide if a certain transaction qualifies for notification or investigation in their respective countries; at the review level, when a merger affects competition in more than one Member State; and at the time of the decision, in relation to the design, testing and implementation of remedies in different Member States.

The procedure for enhanced cooperation provided in the best practices starts like the normal cooperation procedure applicable to all types of multijurisdictional mergers, that is, NCAs reviewing multiple filings inform the other NCAs of such fact and exchange basic non-confidential information in relation to the notification². In cases – such as those referred to in the preceding paragraph – where an in-depth cooperation is necessary or appropriate, NCAs will encourage the merging parties to waive confidentiality with regard to the merger concerned as soon as possible, so that the competent NCAs may liaise with one another and keep one another informed of their analysis at key stages of their investigation (at least in the end of phases I and II and in any remedies discussions) and with respect to key issues (e.g., market definition, assessment of competitive effects, efficiencies, theories of competitive harm).

The guidelines serve a useful purpose and deliver important solutions to help NCAs and companies reach more convergence in problematic multijurisdictional mergers. However, they do not resolve all inconveniences related to multiple filings.

First, as is expressly recognized in the guidelines, NCAs are only expected to follow them to the extent they are consistent with their enforcement priorities.

Second, a large deal of the success of this mechanism depends on the goodwill and cooperation of the merging parties, because NCAs will require their permission to exchange confidential information, and it lies within the parties’ discretion to do so or not.

Third, whilst it is true that the cooperation system deals with some of the inconveniences associated with multiple filings – for instance, in helping NCAs reach informed and consistent (or at least non-conflicting) outcomes in their procedures – the scope of the mechanism is necessarily limited and it does not tackle other important issues in these types of mergers, e.g., costs and time delays.

Last, there is a confidentiality question. Even if merging parties authorize the swap of information between NCAs, confidential information and business secrets exchanged by NCAs are protected in accordance with the national law of the jurisdictions involved. In most cases, this should mean that this data will not be used for any purpose other than the review of the relevant merger. However, it is possible that some national laws allow NCAs to use the information and documents concerned for other purposes, even if they may be detrimental to the merging parties.

For all these reasons, we think that, whenever such alternative is available, the system of case referral provided in the EC Merger Regulation may, in some circumstances, prove to be better for companies engaged in cross-border mergers. The handling of the transaction by the European Commission alone (the one-stop-shop review) normally increases administrative efficiency, avoids duplication and fragmentation of enforcement efforts and potentially incoherent decisions and reduces the costs and burdens arising from multiple obligations and procedures.

Thus, unless it appears that multiple NCAs would be in a better position to assess the transaction and the respective impact in all affected markets, fragmentation of cases may not be the best solution for merging parties.

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