Reed Smith Client Alerts

Nearly half of all concentrations notified under the EU Merger Regulations (EUMR) have consistently been joint ventures,1 which are a very common form of collaboration and concentration between undertakings.

Joint ventures with an EU dimension, created in any of the ways set out in the EUMR constitute a Concentration in the context of Competition Law and will therefore fall within its scope. They will also have to be notified to and cleared by the Commission.

The Commission regularly reserves a final decision on whether or not the notified transaction falls within the scope of the EUMR, thereby leading to uncertainty as to when and when not to file. This alert aims to help those wishing to increase their understanding of this topical issue. The complexity of this area, in fact underscores the importance of a case-by-case assessment.

Auteurs: Marjorie C. Holmes Emma Jones Edward S. Miller Vaibhav Adlakha, Babak Kouchek Zadeh

Competition regimes are in place in over 140 jurisdictions worldwide. In the majority of these jurisdictions, including the regulations in the EU, notification of joint ventures to the respective competition authorities is required under their merger control regimes when certain criteria are fulfilled.

There are three principal questions that determine whether the EUMR applies to a joint venture namely:

  • Is there an acquisition of joint control?
  • Is the joint venture an autonomous i.e. a full-function joint venture?
  • Does the joint venture have an ‘EU dimension’?

It is paramount to undertake a competition law assessment in order to decide whether or not to notify to the respective competition authority. In this respect legal competition advice would help to ensure that notification takes place where necessary and subsequent clearance obtained so as to provide comfort to businesses. If one fails to notify a joint venture, this may result in costly penalties. For example, two fines of €20 million each were also imposed on Electrabel and Marine Harvest for implementation of their transactions prior to clearance.