The European Commission’s Guidance on the referral mechanism for merger investigations from Member States to the Commission gives rise to legal uncertainty


The EU Merger Regulation (No 139/2004, hereinafter “ECMR”)) contains rules on the EU merger control process, including also the competence between the European Commission (“the Commission”) and the Member States to examine the competitive effects of notifiable transactions. Article 22 ECMR allows one or more Member States’ competition authority(/-ies) to request the Commission to examine a concentration, which lacks EU dimension but affects trade between the Member States and threatens to significantly impede competition within the territory of the Member State(s) having made the referral request.

A referral request has in practice been considered possible also in situations where a Member State does not have jurisdiction to investigate a merger because national thresholds are not met.

At the same time, the Commission’s policy has been to discourage referral requests in circumstances where a merger has not triggered national thresholds. The Commission’s approach to the referral mechanism has now been revised significantly. On 26 March 2021, the Commission published a Guidance on the application of the referral mechanism set out in Article 22 of the Merger Regulation (2021/C 113/01). In the Guidance, the Commission gives instructions on the use of the referral mechanism and now rather encourages Member States to use the referral mechanism in situations where a merger, regardless of the size of the parties involved, is considered to have an impact on future competition in Member States’ markets.

What is the practical significance of the Commission Guidance?

The Commission intends to intervene in mergers where the strategic purpose could be to eliminate an innovative and potentially significant new competitor from the market at an early stage (so-called “killer acquisitions”). In such a situation, the turnover of the target company is often small compared to its market value and the purchase price, which better indicate the competitive significance of the target company in the future. Such companies are present, in particular, in the digital economy, pharmaceutical and health technology sectors.

If a notification is required under national merger control rules, the national competition authority must submit a referral request to the Commission under Article 22 ECMR within 15 working days of the merger having been notified. Following a referral request, the merger may not be concluded until the Commission has examined the merger or rejected the referral request.

The situation is more ambiguous and complex if the merger requires no notification to a national competition authority under national law. Pursuant to paragraph 28 of the Guidance, a Member State must submit the referral request within 15 working days of the merger having been made known to it. According to the Commission, the expression ‘made known‘ should be interpreted as implying sufficient information to make a preliminary assessment as to the existence of the criteria relevant for the assessment of the referral. This is a very loose description and leaves the Member States and the Commission a significant discretion and, conversely, uncertainty for the parties to a transaction.

If the merger has already been concluded before a formal referral request and more than six months have elapsed, the Commission will not, in principle, review the merger. However, this indicative timeline would not bind the Commission in exceptional situations, which are assessed on the basis of, for example, the magnitude of the potential competition concerns and the potential detrimental consumer effects.

If the formal referral request is made prior to the closing of a merger, the merger may not be completed prior to the Commission’s approval or its decision not to review the merger.

The Commission´s Guidance creates legal uncertainty into the merger control process, including for implementation and timing of transactions. Companies will have to assess in advance the risk that the transaction’s competitive effects could be reviewed by the Commission even if the EU or national thresholds are not met. Parties to a transaction should account for this risk, for example, when negotiating the closing terms.

Anna Roubier
+358 40 5192 978

Anna Roubier specialises in competition and EU law. Her areas of expertise also include legal issues and administrative processes regarding the regulation of chemicals and products in the EU.

Tatu Kärhä

+358 44 9899 277

Tatu Kärhä assists clients in questions related to public procurement and competition law.


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