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This article is written by Saswata Tewari from the University of Petroleum and Energy Studies, Dehradun. This article examines the European Union’s mergers and acquisitions laws and regulations, as well as the legal structure that makes antitrust compliance easier in European Union member states.


The purpose of mergers and acquisitions is to strengthen the business operations of companies and expand their market to earn huge profits in the future. The joining of the businesses also allows the companies to develop new products more efficiently and to bring down the costs of production or distribution. This results in the increased efficiency of the companies, the market gets more competitive, and finally, the customer benefits from higher-quality products at more reasonable prices.

Combining two businesses not only brings advantages for the businesses but also profits the nation’s economy, however it can also lead to the reduction of competition in the market. This is usually done by making a dominant player or increasing the strength of an already dominant player existing in the market. The reduction in the competitiveness of the market can result in bringing discomfort to the customers because of higher prices, reduced choices, or less innovation. To prevent such situations, different organizations and groups have been working around the world to keep mergers and acquisitions in check and to flourish the economy of countries. The European Commission has to keep mergers and acquisitions under control not only in the European Union Member States but also globally, since mergers between companies outside the European Union (EU) may affect EU markets if the combined companies do business in the EU.

Because of increased competition and globalization, the European single market witnesses a significant number of mergers. Now, these mergers and acquisitions are welcomed as long as they do not affect the competition of the market and can further increase the competitiveness in the European industry, strengthening the growth conditions and developing the standard of living in the EU.

Legal framework and regulations

The main purpose of the EU behind reviewing the mergers and acquisitions is to avoid the harmful effect that these combinations might have on the market competition. Thresholds in the form of annual combined company turnover in terms of global and European sales have been set, and if the combined companies surpass them, the proposed merger should be notified to the European Commission. If not otherwise, the national competition authorities in the EU member states have the authority to review the merger. Not only this, the European Commission has the power to review the mergers which are referred to it by the national competition authorities of the EU member states, and under certain scenarios, it is also possible for the European Commission to refer cases to the national competition authorities of the EU member states.

The main legislation for merger decisions is the EC Merger Regulation and the Implementing Regulation. The Merger Regulation enumerates the important rules and regulations for the examination of concentrations and the Implementing Regulation focuses on the procedural issues such as notifications, deadlines, etc. Not only this, the Implementing Regulation includes official forms for regular merger notifications (Form CO), condensed merger notifications (Short Form CO), and referral requests (Form RS).

Now that we know about the role played by the European Union in mergers and acquisitions and the necessary legislations concerning them, we will further discuss the rules and regulations of the EU in merger control.

Regulatory Framework

Regulation (EC) 139/2004 on the control of concentrations between undertakings (Merger Regulation) establishes a regulatory structure for assessing mergers, acquisitions, and certain joint ventures that meet defined turnover requirements within the European Economic Area. 

The Merger Regulation is further supported by various detailed notices and guidelines regarding the procedural and substantive details of the EU merger control regime. To know more about the relevant legislation of the EU merger control legislation, one can go to the European commission’s website.

Regulatory Authorities

Administration of the EU merger control is looked upon by the European Commission Directorate-General for Competition. Not only this but, the European Commission, in collaboration with national competition authorities, enforces EU competition laws to improve EU markets by ensuring that all businesses compete on their merits. Consumers, companies, and the European economy as a whole benefit from this.


Application of the Merger Regulations arises in any concentration that has an EU dimension. A concentration is described as a lasting change in the control of an undertaking and the ability to exert decisive influence over an undertaking is known as control. The following situations are said to cause a change in control and thus a concentration can arise in:

  • The merger of two or more previously independent undertakings (or parts of them).
  • The acquisition by one or more undertakings, directly or indirectly, of the whole or parts of another undertaking.
  • The creation of a full-function joint venture.


Combinations that are to qualify the prescribed thresholds have to be notified to the European Commission except in the situation where they qualify the two-thirds exception. The prescribed thresholds are strictly turnover-based. 

The nationalities of the parties, whether or not they have assets in the EU, and whether or not the transaction is likely to affect competition in the European Economic Area have no bearing on whether or not a notification is required.

Now, the combination is set to qualify for the main threshold when both the :

  • Combined global sales of all the companies involved exceed EUR 5 billion.
  • At least two of the companies in question have a combined EU turnover of more than EUR 250 million.

And in the following situations, the combinations are said to satisfy the alternative threshold:

  • Many of the companies involved in the combination have a total global turnover of more than EUR 2.5 billion.
  • At least in each of the three-member states, the cumulative gross revenue of all the concerned undertakings reaches EUR 100 million.
  • At least two of the undertakings concerned have a combined turnover of more than EUR 25 million in each of the three-member states included for the above criterion.
  • At least two of the companies in question have a combined EU turnover of more than EUR 100 million.

Now coming to the two-third exception, it is concerned with the situation where even if a concentration meets the main and/or alternative thresholds, it lacks EU dimension if any of the companies involved generates more than two-thirds of its total EU turnover in a single member state.

Antitrust rules and regulations made by the EU

The European Antitrust policy has been developed to safeguard fair competitiveness in the European Union market. Healthy competition in the market encourages companies to give out better products and services to the customers. This promotes productivity and creativity and enables companies to cut down their costs. Competition encourages companies to act unilaterally while still being subject to economic pressure from others in order to remain profitable. The European Union’s antitrust policy is responsible for ensuring that market competition is preserved, which is normally accomplished by ensuring that mergers and acquisitions do not over concentrate market influence in a single company.

The European Antitrust policy is based on two central rules laid out in the Treaty on the Functioning of the European Union (TFEU). These rules are stated below:

  1. Article 101 of the TFEU is the first rule. It says that the agreements between two or more individual market operators that limit the market competition are prohibited. This regulation applies to both horizontal agreements that take place between actual or future rivals operating at the same stage of the supply chain and vertical agreements which take place between the firms working at different levels of the supply chain, for instance, the agreement taking place between a manufacturer and its distributor.
  2. Article 102 is the second rule, which states that Companies with a dominant market position are prohibited from exploiting their position by charging unfair prices, limiting production, or refusing to innovate to the detriment of consumers.

The European Commission has the power given by the TFEU to use these rules and has other investigative powers such as the inspection at business and non-business places, written requests for information, etc, to keep the market competition in check. Not to forget, the commission also has the authority to impose fines on the undertakings that breach the EU antitrust rules. Further, the Council Regulation (EC) 1/2003 lays down the core procedural rules.

The National Competition Authorities have the full authority to use Article 101 and Article 102 of the TFEU to make sure that the market competition is not disturbed or limited in any manner. National courts can also use the said Articles to safeguard the individual rights given to the citizens by the TFEU. Building on these accomplishments, the communication on Ten Years of Antitrust Compliance established additional areas in which the EU could establish a common enforcement region.

The Commission has formulated and adopted a policy on the application of EU competition law to the cases on damages in National Courts as part of the overall implementation of EU competition law. It also works with National Courts to ensure that EU competition laws are consistently enforced around the board.

General review of the EU model towards mergers and acquisitions

The rules and regulations made by the EU for the mergers and acquisitions have been made to safeguard the security of competitiveness in the European Union member states’ markets. 

The aim of reviewing proposed mergers and acquisitions is to avoid negative effects on competition. Mergers that span more than one member state’s national boundaries are scrutinized at the European level. This helps companies doing business in several EU member states to get approval for their mergers in one go.

All proposed mergers that are notified to the Commission are scrutinized to see whether they will substantially obstruct successful competition in the EU. If these combinations do not cause any hindrance to the market’s competitiveness then they are automatically accepted but if they do, and the merging companies make no promises to remove the impediment, they must be forbidden to protect businesses and customers from higher costs or a narrower range of products and services. Proposed mergers may be prohibited if the merging parties are major competitors or if the merger may otherwise substantially undermine effective market competition, especially by establishing or strengthening a dominant player.

Nonetheless, not all mergers that greatly obstruct competition are forbidden. Even if the European Commission finds that a proposed merger has the potential to distort competition, the parties can agree to take steps to mitigate this impact. They may, for example, agree to sell a portion of the combined company or license the technology to another market player. The European Commission gives conditional approval to the merger if it is satisfied that the commitments will preserve or restore competition in the market, thus protecting consumer interests.European Commission keeps an eye on the merging firms to see if they uphold their promises, and if they don’t, they may step in.


Mergers and acquisitions are a contributing factor to a country’s economic development. They bring in healthy competition, develop products at fair prices for customers and upgrade the standard of living of the nation. But even though mergers and acquisitions have benefits, they can also be detrimental to a country if they are not regulated properly. 

Proper regulation of mergers and acquisitions is the reason for the increased competition within the European market which makes it more appealing for businesses to join forces in the EU. It is undeniable that by ensuring market competition, the EU has not only facilitated productive creativity but also enabled businesses to deliver products and services for consumers at the most advantageous prices.


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