Acquisitions of minority interests in competitors The EU perspective

1. Acquisitions of minority interests in competitors The EU perspective Michael Reynolds Partner, Allen & Overy LLP, Brussels

2. Introduction • At EU level, since 1990 the EC Merger Regulation (ECMR) has been the primary tool for reviewing and regulation the acquisition of minority interests • At EU national level, merger control is also primary tool • Articles 81 and 82 may catch acquisitions that escape scrutiny under the ECMR

3. EC Merger Regulation • Jurisdiction to review acquisition of minority interests • Substantive assessment of acquisitions of minority interests • Post-prohibition divestment of minority interests

4. ECMR - Jurisdiction • Commission Notice on the concept of concentration • Concepts of legal or de-facto control can catch acquisition of minority shareholdings • Aker/Kvaerner • Reductions of minority interests to avoid ECMR jurisdiction • Aker/Kvaerner • Microsoft/Liberty Media/Telewest • Microsoft/Time Warner/Thomson/Content Guard

5. ECMR - Substantive assessment • Substantive assessment of minority interests under the ECMR – main examples • the acquisition of a minority shareholding is the transaction being notified • when the target holds a minority interest in a competitor • In the latter scenario, the Commission looks beyond control to “structural links” and influence over third party competitor via the minority holding • Examples: AXA/GRE, Nordbanken/Postgirot, Thyssen Krupp, Exxon/Mobil, Volvo/Renault

6. ECMR – Post-prohibition divestment of minority interests • Commission’s analysis is influenced by the need to restore the status quo ante • Commission’s approach can be more cautious that under substantive assessment • Factual and procedural factors will influence the outcome • Examples: Tetra Laval/Sidel, Schneider/Légrand

7. EU National Merger Control • Most national regimes apply ECMR concentration test • German merger control applies to acquisitions of 25% and may catch lower shareholding through “competitively significant influence” test • UK test allows jurisdiction over acquisitions allowing for ability to exercise “material influence” • OFT has said it may examine acquisitions of shareholdings as low as 15%

8. Articles 81 and 82 • Residual application to acquisitions that fall outside the ECMR • No prohibitions post-ECMR • However, Commission has indicated that it will apply Articles 81 and 82 where needed • Dresser/Ingersoll/Nuovo Pignone • T-Online

9. Acquisitions of minority interests in competitors The EU perspective Michael Reynolds Partner, Allen & Overy LLP, Brussels