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Mergers

Competition authorities make sure that, when companies join forces, the market balance will not be upset in ways that could distort competition or create a dominant position that could be abused.

Before merging or forming associations, big companies must ask the Commission for authorisation, providing the information it needs to reach a decision.

Why do mergers need to be cleared at European level?

So that companies trading in more than one EU country can obtain clearance for their mergers in one go.

Combining their activities may allow companies to develop new products more efficiently or reduce production or distribution costs. Through increased efficiency, the market becomes more competitive, and consumers benefit from better goods at fairer prices.

But some mergers may reduce competition, usually by creating or strengthening a dominant player. This is likely to harm consumers through higher prices, reduced choice or less innovation.

Which mergers does the European Commission examine?

Any merger that would create a company with an annual global and European turnover exceeding preset thresholds.

Below these thresholds, mergers can be reviewed by national competition authorities.

The rules apply to all mergers, no matter where in the world the merging companies have their registered office, headquarters, activities or production facilities. Because even mergers between companies based outside the EU may affect EU markets if the companies do business there.

The Commission may also examine mergers referred to it by national competition authorities in EU countries. The merging companies or the national competition authority may request this. Under certain circumstances, the Commission may also refer a case to a national competition authority.

When are mergers rejected or approved?

Mergers are rejected when they would significantly restrict competition in the EU.

This is in order to protect businesses and consumers from higher prices or a more limited choice of goods or services. Proposed mergers may be prohibited if the merging parties are major competitors or if the merger would otherwise significantly weaken competition in the market by creating or strengthening a dominant player.

Mergers are approved unconditionally if the Commission concludes they would not restrict competition.

Conditional approval

The European Commission may give conditional approval for a merger when the parties involved commit to taking action to prevent their merger from distorting competition.

They may commit, for example, to selling part of the combined business or to license technology to another market player. If the Commission is satisfied that the commitments would maintain or restore competition in the market, it conditionally approves the merger and monitors whether the merging companies fulfil their commitments. The Commission may intervene if they do not.


  
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