The most basic condition applicable to a divestment or other remedy is that it must be capable of restoring effective competition in a timely fashion, while being simple enough to allow the Commission to determine this with sufficient certainty.
The Commission has a clear preference for structural remedies, in particular divestments, as it believes that the most effective way of restoring competition will be either to create new competitive entry or strengthen existing competitors through divestments. According to the Commission’s Best Practice Guidelines for Divestiture Commitments, divested activities must constitute a viable business able to compete over the long term on a stand-alone basis. In this regard, the Commission will consider a broad range of divestiture remedies and where appropriate alternative structural remedies to facilitate market access, such as the granting of licences. In T-Mobile/Orange (2010), in addition to a divestment remedy, the parties concluded a revised network sharing agreement with a competitor to secure its position as a competitive force on the market. In Hutchison 3G Austria/Orange Austria (2012), in addition to a divestment remedy, Hutchison committed to provide wholesale access to up to 30 per cent of its network to 16 mobile virtual network operators for a period of 10 years. Divestments can only be made to a suitable purchaser, approved by the Commission, and the sale must be completed within a specified time limit (usually six months). If the parties do not find an acceptable purchaser within the disposal deadline, a ‘divestiture trustee’ will handle the disposal of the business at no minimum price. Any divestment remedy must be accompanied by a proposal to safeguard the business in the interim and the parties will need to propose a monitoring trustee to oversee compliance with the preservation measures.
A principal concern of the Commission is the practical efficacy of the remedies proposed by the parties and, in particular, the need to ensure the long-term viability of the ‘remedy-taker’ or divestment purchaser. When there are doubts about the viability of the business to be divested, an ‘upfront purchaser’ may be required. The Commission may also require a ‘fix-it-first’ remedy, meaning that the parties must identify a purchaser for the divestment business and enter into a binding agreement with that purchaser during the Commission’s merger control review. The viability of the business to be divested was an important part of the Commission’s assessment in the cases of GE/Alstom (2015), Chemchina/Syngenta (2016), London Stock Exchange/Deutsche Börse and HeidelbergCement/Schwenk/Cemex Hungary/Cemex Croatia (both 2017).
The Commission may also accept other non-divestment structural remedies such as the severing of links with competitors or important players in a supply chain. For example, the Commission intervened in Glencore/Xstrata (2012) because of concerns that the merged entity would have the ability and incentive to raise prices of zinc metal. To remedy concerns, Glencore committed to sever links with Nyrstar (the largest European zinc metal producer). This included inter alia the termination of an exclusive long-term offtake agreement and committing not to buy zinc metal quantities from Nyrstar for 10 years.
In certain (but more limited) circumstances, behavioural remedies can be accepted, such as in Microsoft/LinkedIn (2016), which was granted conditional clearance in Phase I on the basis of the parties’ commitments to allow PC OEMs using Windows not to install the LinkedIn application and to ensure interoperability and provide access to all necessary information to LinkedIn’s competitors. Similarly, in ASL/Arianespace (2016) the Commission was satisfied with behavioural commitments that included the implementation of information firewalls and restrictions to employee mobility between the merging parties. In other cases (eg, Universal Music Group/EMI Music (2012)) the Commission has accepted behavioural remedies as part of a package including other divestment and structural commitments.
Alternatively, primary and secondary remedies can be offered in circumstances where the preferred primary remedy may be difficult to implement owing to external factors. The second alternative remedy must be equal to or better than the first remedy, and will typically involve divestiture of the parties’ ‘crown jewels’. This twofold structure has been used in a number of cases including Pfizer/Wyeth (2009), Teva/Ratiopharm (2010) and Swissport/Servisair (2013).
Under the Remedies Notice, the Commission has discretion to review the need for commitments when the parties are able to establish that a ‘significant change in market circumstances’ has occurred. This review is of particular relevance for non-divestment type remedies (see, for instance, Newscorp/Telepiu (2010) and Hoffmann-La Roche/Boehringer Mannheim (2011)). Typically, such commitments will include a review clause and the Commission has been willing to accept detailed review clauses specifying certain criteria of particular relevance for the future assessment of the need for the commitments (see, for instance, T-Mobile/Orange (2010) and SNCF/LCR/Eurostar (2010)).
The Commission will accept undertakings both in Phase I and Phase II. In Phase I, the commitments must be submitted to the Commission within 20 working days from the date of receipt of the notification (and in practice in draft form earlier). The notifying parties can also in some circumstances withdraw their notification and resubmit it following appropriate changes to the original concentration in an attempt to avoid the need for second-stage proceedings. In Phase II, undertakings must be submitted to the Commission at the latest within 65 working days of initiation of the Phase II investigation.
The court has shown a willingness to accept deviations from the strict procedural rules, particularly in relation to timing in cases of ‘late remedies’ (Case T-87/05 EDP v Commission (2005), and Case T-212/03 MyTravel (2008)).
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