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Revision of EU Merger Control Rules

As of 1 January 2014 the EU procedures on merger control have been modified. More proposed mergers will now be eligible for a “simplified” procedure for approving mergers. In the long run, however, a discussion on the inclusion of social and other criteria in approving mergers is needed.

Mergers between companies can have widely varying impacts on prices and employment. Sometimes mergers result in greater efficiency and lower prices for consumers; in other cases, mergers can created a dominant position for the newly merged entity and thus the opportunity to raise prices to consumers. Similarly, the newly merged entity could create a stronger employer and more stable employment; on the other hand, mergers often result in job losses due to rationalization.

 

In principle EU merger control is designed to discourage increases in prices by preventing the creation of dominant market positions. A merger control procedure attempts to indentify when dominant market positions would be created (by exceeding certain thresholds for size of market and market share) and the EU competition authority can either disapprove mergers or approve them only under certain conditions. Since many mergers are “non-controversial” in terms of market power, the Commission has extended the number of cases which will be eligible under the so-called simplified procedure. This procedure imposes a lower reporting burden on companies.

 

Workers are considered “third parties” under the merger control procedure and have a right to express their opinion on mergers, for example by participate in hearings on proposed mergers. However, the impact on employment is not an explicit criterion in the vetting of mergers. Neither is the impact on the environment nor the form of financing. In the long run, a discussion on the explicit inclusion of social and other criteria (for example to avoid high leverage finance of the merger) in EU merger control would be very welcome.

 

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