European Competition Network publishes a Joint Statement on the implementation of merger call-in mechanisms

Call-in powers enable national competition authorities to intervene towards concentrations which do not reach the ordinary thresholds provided by national merger control regimes (the so-called sub-thresholds transactions) that, although not triggering ordinary filing obligations, may nonetheless have a significant impact on competition, to the detriment of consumers and, more broadly, of competitive market dynamics.

Such an instrument – introduced by 11 EEA States, while 12 others are considering it – has in practice enabled intervention by competition authorities in relation to several sub-thresholds transactions. It is also in line with the provision of an obligation upon gatekeepers to inform the European Commission of their intended acquisitions in the digital sector, as defined in the Digital Markets Act, and by requiring the Commission to transmit to the Member States the information provided by gatekeepers.

Through the Joint Statement, ECN sends a clear message: the rules on call-in powers must ensure balance between effective merger control enforcement and legal certainty, granting predictability and alleviating administrative burdens for businesses and competition authorities empowered with call-in prerogatives.

In this context, two parameters acquire pivotal importance: the “Material Scope” and “Temporal Scope” of the call-in powers.

On the first point, ECN states that the exercise of call-in mechanism should be limited to transactions which, although being sub-thresholds, prima facie could still lead to material anticompetitive effects, thus having a “Material Scope”.

To increase legal certainty as to the requirements for activating call-in mechanisms, ECN considers that national legislators may introduce the criteria of local nexus such as present or foreseeable activities in loco or with local effects; additional thresholds based on turnover, transaction value or market share.

ECN further states that the possibility to exercise call-in powers should in principle be limited to a pre-defined period (Temporal Scope).

According to ECN, complementing legislation on call-in powers with soft-law instruments should be “strongly considered” by jurisdictions, in the view of reinforcing legal certainty and predictability and reducing potential uncertainties. Informal guidance, voluntary notification and possibility to engage in consultations are some examples of how these aims could be achieved, also in the view of enabling undertakings to better anticipate potentially problematic (sub-thresholds) transactions and self-assess the likelihood of transactions becoming subject to merger control review.

Finally, ECN observes how adequate internal procedural rules could be implemented or adapted to minimise undue additional administrative burden for businesses and competition authorities.

The Joint Statement shows a valuable perspective on an extremely important instrument. In the last years, screening of sub-thresholds transactions has become a very current topic, including in Italy, that businesses should consider thoroughly when assessing concentrations.

Authored by Domenico Gullo and Flaminia Perna.