BIIC London, 16 November 2007

1. BIIC London, 16 November 2007 The new EU merger remedies policy Dr Johannes Luebking Deputy Head of Unit, Directorate C-5, DG Competition The views expressed are personal and do not necessarily reflect the views of the European Commission nor those of DG COMP

2. Reasons and objectives of review • Reflect conclusions from Commission’s Merger Remedies Study (2005) http://ec.europa.eu/comm/competition/mergers/studies_reports/remedies_study.pdf • Incorporate recent jurisprudence • Important guidance in EDP/GDP, GE, Tetra, Cementbouw and easyjet judgements • Reflect experience gained in recent Commission practice • Relevant recent remedies cases such as Inco/Falconbridge or GDF/Suez • Update with regard to changes introduced in 2004 Merger Review • Mainly concerns options to extend deadlines to discuss and assess remedies • Planned adoption of the new texts early 2008

3. General Principles • Allocation of responsibilities(EDP/GDP/ENI, GE/Honeywell) • Commission informs the parties of the competition concerns identified • It is for the parties to propose remedies, Commission cannot unilaterally impose conditions • Commission has to assess the effects of the operation, as modified by the remedies • Commission has eventually to prove that remedies are not sufficient to remove competition concerns • Proportionality (Cementbouw) • Parties do not need to submit remedies that go further than what is necessary to remove competition concerns • If they do so, however, Commission cannot reject them and impose different ones

4. General Principles • Assessment standard(GE/Honeywell, easyjet) • Commitments have to eliminate competition concerns entirely and to be comprehensive and effective from all points of view • Certainty as to the implementation • Probability as to the assessment of the operation (“more likely than not that the operation modified significantly impedes effective competition”) • Appropriateness of different types of remedies • Divestitures generally preferred, including for non-horizontal concerns • Other structural commitments, such as access remedies, acceptable if same effect as divestiture – divestitures as “benchmark” • Where market structure is affected only by future behaviour of the merging parties, also other remedies may have to be assessed (Tetra) • Commitments on future behaviour, however, only exceptionally accepted. Certainty of implementation and effective monitoring particularly required (easyjet)

5. Divestitures. Additional information requirement • There is a clear asymmetry of information on the right scope of viable business; Commission has the burden of motivation to reject commitments • New information obligation of the parties in the Implementing Regulation: Form RM • Nature and scope of commitments offered; • Conditions for their implementation; and • Suitability to remove any impediment to effective competition • Deviations from Commission’s Model Texts • For divestitures, in particular, detailed factual description required on how the business is currently operated; to be compared with scope of Divested Business as offered in the commitments

6. Divestitures. Scope • All assets and personnel necessary to ensure viable and competitive business to be transferred • Independent access to supply (Inco/Falconbridge; GDF/Suez; Evraz/Highveld), IP rights,… • Shared assets (duplication, if necessary) and personnel to be transferred • Modalities: • Preference for stand-alone business • Carve-outs acceptable • Risks for viability and competitiveness to be limited by requiring transfer of a stand-alone business >>>carve out started in interim period • Reverse carve out as option

7. Divestiture. Purchasers Divestiture only effective once business is transferred to suitable purchaser • Suitable purchaser to be agreed within fixed time-limit • Normal procedure. • Multitude of purchasers available (also including special purchaser requirements) • No specific issues interfere with divestiture • Up-front buyer • Uncertainty of implementation • Obstacles for divestiture, e.g. third party rights • Uncertainty that Business will attract suitable purchaser • Difficult interim preservation: • If high risk of degradation • Fix-it-first remedy • Preferable where identity of purchaser is crucial for effectiveness of remedy • E.g. if viability is ensured by specific assets of the purchaser (Inco/Falconbridge) or where purchaser needs to have specific characteristics (tele.ring)

8. Non divestiture remedies • Removal of links with competitors • Divestiture of minority shareholding or, exceptionally, waiving rights related to minority stakes • Termination of distribution or other contractual arrangements • Access commitments: • Granting of non-discriminatory access to infrastructure, networks, technology/IP rights or essential inputs. • Acceptable, to lower barriers to entry or eliminate foreclosure concerns, if same effect as divestiture • For lowering entry barriers • Ex.: pay-TV platforms; airport slots; gas release programs • Likely entry of new competitors • For foreclosure concerns • Access to pipelines, telecom networks, telematics networks • Likely use by competitors • For foreclosure concerns by IP rights or key technology • Granting of non-exclusive licenses • Ex.: GE/Instrumentarium; Axalto/Gemplus • Monitoring of such commitments • Self-enforcement of commitments via market participants • Via arbitration clauses (ARD, easyjet) • By national regulators

9. Non divestiture remedies • Other non-divestitures: • To be assessed on a case-by-case basis (Tetra) • May be accepted in specific circumstances, such as conglomerate concerns • Difficulty of monitoring and risks of effectiveness: they may only amount to mere declarations of intentions