Recent European Union (EU) merger developments raise concerns for both European and non-European businesses and consumers, and the ability of national governments to regulate events that affect their local economies. In particular, a recent ruling by the General Court of the European Union (GC) interprets Article 22 of the EU Merger Regulation (EUMR)1 to allow the European Commission (EC) to review transactions that fall below national thresholds and to initiate such reviews outside of the strict time limits set forth in the EUMR.
This new and dramatically expanded application of Article 22 creates profound uncertainty by potentially requiring pre-merger notifications to 27 separate EU Member States, instead of the previous “one-stop-shop” originally envisioned. After this ruling, the criteria for whether the EC is empowered to review transactions is no longer based on objective standards, clear time limits, or material local nexus requirements. The expansion of Article 22 not only creates uncertainty for businesses contemplating M&A activity, it also paves the way for the EC to prohibit mergers that were previously outside of its jurisdiction, including mergers with an insufficient connection to the EU. Legislative history shows that Article 22 was not meant to be used this way.
