Regulation (EC) No 139/2004 lays down European Union (EU) rules with regard to the control of concentrations1 where two or more firms combine by means of a merger or an acquisition or create a joint venture performing on a lasting basis all the functions of an autonomous economic entity.
It establishes a legal framework for assessing the impact of such concentrations on competition in the internal market, particularly focusing on preventing the creation or strengthening of dominant positions or other structural changes that would significantly impede effective competition.
The regulation grants the European Commission the authority to approve (either unconditionally or with modifications) or prohibit such concentrations based on their impact on competition.
It introduces a one-stop-shop system for reviewing concentrations that might otherwise require that several competition authorities in the EU be notified.
At the same time, this system is based on the principle of subsidiarity, whereby a merger is examined by the judicial authority best placed to do so.
KEY POINTS
This regulation applies to all concentrations with an EU dimension2. As a general rule, the party or parties that will acquire control following the concentration must notify the Commission prior to its implementation.
Pre-notification referral procedures
The regulation specifies that the firms or persons concerned may inform the Commission, by means of a reasoned submission sent before notification, that the proposed transaction, while resulting in a concentration with a EU dimension, affects competition in the market of one EU Member State that presents all the characteristics of a distinct market and to request that this transaction be referred to the Member State concerned.
If the Member State concerned does not disagree with the application to refer the case within 15 working days of receiving the submission, the Commission has 25 working days from receiving the submission to refer all or part of the case to that Member State’s competent authorities so that that Member State can apply its national competition law.
The same procedure applies to transactions that do not have an EU dimension but are capable of being reviewed under the national competition laws of three or more Member States. The parties to such transactions may request that the concentration instead be examined by the Commission.
Merger control proceedings: the Commission
Once it receives a notification, the Commission examines the notification (Phase I) and determines by decision whether the concentration:
falls within the scope of the regulation;
is compatible with the common market; or
raises serious doubts as to its compatibility and requires an in-depth review of the concentration (Phase II).
Except in very specific circumstances or if expressly agreed with the Commission based on the conditions set out in the merger regulation, a concentration with an EU dimension cannot be implemented before notification or until it has been declared compatible with the common market. If a concentration has already been implemented and is subsequently declared to be incompatible with the common market, the Commission can order the companies concerned to dissolve the concentration or restore the situation to the way it was prior to the implementation of the concentration.
The Commission can also attach to a compatibility decision (issued at the end of either a Phase I or a Phase II investigation) conditions and obligations intended to ensure that the undertakings concerned comply with the commitments they have entered into vis-à-vis the Commission, with a view to rendering the concentration compatible with the common market.
To enforce compliance with this regulation, the Commission may impose:
fines not exceeding 1 % of the aggregate turnover of the firm in the event that it supplies incorrect, incomplete or misleading information or does not supply information within the required time limit;
fines of up to 10 % of the aggregate turnover of the firm concerned in the event that, either intentionally or negligently, it fails to notify the Commission about a concentration prior to its implementation, implements a concentration in breach of the regulation or fails to comply with a Commission decision; or
periodic penalty payments not exceeding 5 % of the average daily aggregate turnover of the company for each working day of delay, calculated from the date set by the Commission in any decision requiring information, ordering inspections, etc.
The Commission must consult an advisory committee composed of representatives of the Member States’ authorities before it takes any Phase II decision relating to compatibility or incompatibility or any decision on the imposition of fines or periodic penalty payments. The Court of Justice of the European Union can abolish, reduce or increase any fines or periodic penalty payments imposed.
Post-notification referral procedures
A Member State may, within 15 working days of the date of receiving a copy of the notification, acting on its own initiative or at the Commission’s request, declare that a concentration significantly affects competition in its domestic market. In the event that the Commission considers that such a product or service market presents all the characteristics of a distinct market, it may decide to refer the whole or part of the case to the competent authorities of the Member State. In the event that the Commission considers that such a distinct market constitutes a substantial part of the common market, it shall refer the whole or part of the case relating to the distinct market.
The Commission has either 25 working days (in a Phase I investigation) or 65 working days (in a Phase II investigation) following notification of the concentration to decide whether to deal with the case itself under this regulation or to refer the whole or part of the case to the competent authorities of the Member State. If the Commission fails to adopt a decision, the case is considered to have been referred to the Member State concerned.
Member States can also request that the Commission investigate a concentration without an EU dimension when it affects trade between Member States and threatens to significantly affect competition within the territory of the Member State or States making the request. The Commission must then inform the competent authorities of the Member States and the firms concerned, fixing a time limit of 15 working days within which any other Member State can join the initial request. If, within 10 working days after expiration of the time limit to join the initial request, the Commission has not adopted a decision to refer or not to refer, it is deemed to have adopted a decision in accordance with the request.
Merger simplification package
Since experience has shown that certain categories of concentrations are generally not likely to raise competition concerns, the Commission has, over the years, sought to focus its attention on the more complex cases, and to reduce the administrative burden associated with those that do not give rise to concern.
The Commission’s latest initiative to simplify the process was in 2023 when it adopted a package comprising Regulation (EU) 2023/914 (an implementing act), a notice on the simplified procedure for certain concentrations under Regulation (EC) No 139/2004 and a communication on the submission of documents. The Commission’s notice sets out the conditions under which it will review certain concentrations and provides guidance on the simplified procedure laid down in Annex II to Regulation (EU) 2023/914.
The changes, which entered into force on , aim to reduce the red tape involved in providing notification about mergers both for the notifying parties and for the Commission. They clarify which cases can be handled under the simplified procedure, reduce the amount of information required for the notifications about transactions in all cases and introduce electronic notifications by default.
Concentration. A concentration arises where a change of control on a lasting basis results from either the merger of two or more previously independent companies or parts of companies, or the acquisition by one or more persons (already controlling at least one company) or by one or more companies of direct or indirect control of one or more other companies. Multiple transactions that are conditional on one another or are closely connected are regarded as a single concentration.
Concentration with an EU dimension. A concentration has an EU dimension where the combined aggregate worldwide turnover of all the companies concerned is more than €5 billion and the aggregate turnover in the EU of each of at least two of the companies concerned is more than €250 million, unless each of the companies concerned generates more than two thirds of its aggregate EU-wide turnover within one Member State. Even if the abovementioned thresholds are not reached, a concentration may have an EU dimension if:
the combined aggregate worldwide turnover of all the companies concerned is more than €2.5 billion;
in each of at least three Member States, the combined aggregate turnover of all the companies concerned is more than €100 million;
in each of at least three Member States, the aggregate turnover of each of at least two of the companies concerned is more than €25 million;
the aggregate EU-wide turnover of each of at least two of the companies concerned is more than €100 million, unless each of the companies concerned generates more than two thirds of its aggregate EU-wide turnover within one Member State.
MAIN DOCUMENT
Council Regulation (EC) No 139/2004 of on the control of concentrations between undertakings (the EC Merger Regulation) (OJ L 24, , pp. 1–22).
RELATED DOCUMENTS
Commission Notice on a simplified treatment for certain concentrations under Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings (OJ C 160, , pp. 1–10).
Communication from the Commission – Communication pursuant to Articles 3(2), 13(3), 20, and 22 of Commission Implementing Regulation (EU) 2023/914 implementing Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings and repealing Commission Regulation (EC) No 802/2004 (OJ C 160, , pp. 11–13).
Commission Implementing Regulation (EU) 2023/914 of implementing Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings and repealing Commission Regulation (EC) No 802/2004 (OJ L 119, , pp. 22–102).
Successive amendments to Regulation (EU) 2023/914 have been incorporated into the original text. This consolidated version is of documentary value only.