This article was originally published on Finsbury.com
Merger control has long been seen, more than a little unfairly, as the rather dull and dusty preserve of an insular world of academics and economists, lawyers and technocrats, and with a few notable exceptions, not something to overly concern deal closure.
Getting a deal through merger clearance in the European Union is often an essential part of transaction completion, but one historically perceived to be procedural and formulaic, a process to be followed but one where few surprises were either expected or delivered. Certainly, any problems could be ironed out with a well-placed call or two from a Member State to the European Commission.
The first term of Margrethe Vestager as European Commissioner for Competition has challenged and ultimately dismissed these lazy assumptions. In the highest profile and most politically sensitive transactions, she has rigorously enforced competition policy, defended her own independence and faced down the most powerful EU Member States.
Her prohibition of a series of blockbuster transactions – Siemens/Alstom and the Tata Steel/ThyssenKrupp JV in 2019; Deutsche Börse/London Stock Exchange in 2017; Hutchison/Telefónica UK in 2016 – created more than a degree of both corporate and political discomfort.
While such prohibitions are rare, with the last decade seeing only ten such terminal interventions, it is the politically contentious nature of those delivered by Commissioner Vestager that has caught the eye. None more so than Siemens/Alstom, which is likely to have significant implications for how the European Commission in future assesses mergers. The refusal of Commissioner Vestager to bow to political pressure from both the Bundeskanzleramt and Élysée Palace, was for some, the final straw.
It was no coincidence that a far-reaching ‘manifesto’ for reform of EU competition policy published by the French, German and Polish Governments shortly after the Siemens/Alstom prohibition, advocated greater involvement of Member States in merger control decision-making (with a suspicion that competition analysis would be trumped by political priorities such as jobs) and what appeared to be protectionism against deep-pocketed (and often state-owned) foreign interlopers.
The reappointment of Margrethe Vestager to the European Commission, with an expanded role covering digital policy in addition to her previous competition brief, has been seen by some commentators as presaging an intensification of this debate.
In response to her reappointment, Commissioner Vestager said in a tweet that “Integrity, independence and confidentiality of our law enforcing procedures are non-negotiable,” signalling her intention that her first term in office will not be the high-water mark for a vision of merger control in the EU based on clear and well-understood analysis of the competitive impact of mergers, independent of and resistant to political interference.
Certainly, the new European Commission headed by President-elect Ursula von der Leyen, will come under immediate pressure from several powerful Member States to reform how merger control is undertaken. With the liberalising and free-market influence of the UK now almost a distant memory in Brussels, the future path for merger control in the EU might be expected to become more politically-driven, involving a greater role for Member States, with merging parties having to give far greater consideration to a wider range of audiences and how their transaction is both positioned and perceived on issues such as employment, investment, R&D and even environmental impact. Merger control might soon be about to become really interesting.