The Council has adopted Council Regulation on the Control of Concentrations between Undertakings (OJ 2004 L 24/1) (the "Regulation") which replaces Council Regulation (EEC) No. 4064/89 on the Control of Concentrations between Undertakings (OJ 1990 L 257/13) as amended principally by Council Regulation (EEC) No. 1310/97 (OJ 1997 L 180/1). The Regulation came into force on 1st May, 2004. The Commission's Green Paper on the Review of Regulation (EEC) No. 4064/89 (COM (2001) 745 final) (the "Green Paper") in which the Commission invited comments principally on the following areas:

1. The operation of the turnover thresholds and case referral mechanisms;
   
   
2. The substantive test to review concentrations by the Commission; and
   
   
3. Procedural issues.

The following are some of the main features of the Regulation:

• The Green Paper suggested a so called "mandatory 3+ system" under which a concentration would be deemed to have a "Community dimension" and therefore subject to EU merger control if the concentration was notifiable under the national laws of three or more Member States. The Commission pointed out in the Explanatory Memorandum to the Proposed Regulation that a closer examination of this proposal does not provide the initially perceived advantages of being simple, clear and legally certain.
  
  The Regulation introduces "optional 3+ system". Under the latter, if a proposed transaction is caught by the national thresholds in three or more Member States, the parties have a choice either to notify the transaction to the national jurisdictions or to make a request that the case be deemed to have a Community dimension and therefore notified to the Commission. The Member States concerned are given a right to veto the notifying parties' choice of notifying the transaction to the Commission.
  
  
• Provision is made under which notification may be made at the pre-agreement stage. The old EU Merger Control Regulation only allowed for the making of a notification once an agreement has been concluded. The latter necessitated a split signing and completion. The Regulation specifies that a notification may be made where the undertakings concerned demonstrate to the Commission a good faith intention to conclude an agreement or, in the case of public bid, where they have publicly announced an intention to make a bid, provided that the intended agreement or bid would result in a concentration with a Community dimension. This is considered to be a significant practical development as it allows the notifying parties to lodge a notification to the Commission well before a definitive agreement is signed and if approval is received from the Commission prior to the execution of a definitive agreement, it appears that the parties will not need to insert a condition precedent regarding the receipt of Commission approval;
  
  
• The Green Paper invited views on the substantive test that should be applied in vetting mergers notified under the EU Merger Control Regulation. In particular it sought views on how the dominance test set out in the EU Merger Control Regulation compares with the "substantial lessening of competition" standard used in certain jurisdictions including the US and more recently the United Kingdom and ROI. The new Regulation introduces the test of whether or not a transaction will "significantly impede effective competition in the common market or in a substantial part of it, in particular as a result of the creation or strengthening of a dominant position".
  
  
• The old EU Merger Control Regulation specified that the Commission may require the parties to a concentration to provide "all necessary information" (Article 11(1)). The Regulation specifies that the "owners" of the undertakings or their representatives and, in the case of legal persons, companies or firms, or associations having no legal personality, the person authorised to represent them by law or by their constitution, shall supply the information requested on behalf of the undertakings concerned.
  
  
• The Regulation increases the ceilings for fines and periodic penalty payments for breaches of the Regulation as the old fines were regarded by the Commission as being too low and therefore not a sufficient deterrent. The old limit for fines under Article 14(1) of the old Regulation was _50,000 and that the new Regulation has changed this to 1% of the turnover of the undertaking or association of undertakings concerned. With regard to periodic penalty payments, the maximum daily amount was set at _25,000 under Article 15(1) of the old Regulation. The new Regulation has raised this to 5% of the average daily turnover of the undertaking or association of undertakings concerned.
  
  
• The Regulation empowers the Commission to interview any natural or legal person who consents to be interviewed for the purpose of collecting information relating to an investigation. The interview may be conducted by telephone or by other electronic means. The Regulation provides that where an interview is conducted at the premises of an undertaking, the Commission is obliged to inform the Competition Authority of the Member State in the territory in which the interview takes place and if the Competition Authority concerned requests, its officials may assist the Commission officials in the conduct of the interview.

November 2004.

For further information please contact Marco Hickey.