Than avoiding competing and accommodating

Hence it appears that there is an enforcement gap in relation to the aforesaid minority shareholdings causing competitive harm at the EU level. In fact, only three member states have acted to address this form of competition concern within their own national merger control regimes, specifically Austria, Germany and the UK, although the UK will soon not be a member state.Outside the Union, the Commission notes that many jurisdictions, such as the US, Canada and Japan, have the competence “to review similar structural links under their respective merger control rules.” However, the Commission’s case for ending the aforesaid enforcement gap does not simply rest on the fact that other jurisdictions have this competence and apply it, although this is undoubtedly supportive of EU merger law being amended to encompass minority share acquisitions with a potential Community competition concern.(EUMR) makes it timely to explore this neglected area of EU merger control.Initially, using economic theory and actual cases vetted by European regulators, the paper reveals an enforcement gap in respect of minority shareholdings which cause competitive harm at the EU level.Such coordination may manifest as an explicit agreement between firms but it may also take the form of tacit collusion.Similarly, an undertaking acquiring a significant minority shareholding in a close competitor could increase the ability and willingness of the two involved undertakings to explicitly or tacitly engage in coordinated behaviour—particularly if the minority shareholding gave the acquirer access to the commercial secrets of its rival—so as to maximise profitability.However, what it fails to encompass is the acquisition of a minority shareholding unrelated to control in the above sense, even though the shareholding could have the ability to cause competitive harm.

The acquisition of control under the 2004 EUMR also encompasses the situation when two undertakings establish a joint venture which performs on a lasting basis all the functions of an autonomous economic entity.

It is one of these conditions, the concentration condition, which means that the majority of minority shareholdings with a potential Community competition concern do not fall within the remit of EU merger control, and hence EU law.

Specifically, the concentration condition requires the acquisition of control whereby a person(s) or undertaking(s) acquire control, on a lasting basis, over one or more other undertakings, or parts thereof.

Thereafter, the Commission’s proposal to end this gap, known as the targeted transparency system, which intentionally fits with the EUMR’s established architecture of separate jurisdictional zones, is explored.

However, the paper reveals that the inability of the architecture of separate jurisdictional zones to guarantee that nearly all merger cases with a potential Community competition concern would be vetted under EU law is echoed by the Commission’s targeted transparency system in respect of minority shareholdings.

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Of course, in the light of the referendum, the UK in the near future will no longer be a member state of the EU.

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