Set-back for merger task force proposal

Date: 27/06/1996

By Chris Johnstone

COMPETITION Commissioner Karel Van Miert is going to have to settle for a second-best scenario for boosting his merger vetting powers after some national governments balked at his most ambitious plans.

Some of those same governments are also warning that even Van Miert's scaled-down goals risk being complicated by sensitive state aid cases being brought up when serious horse-trading on merger regulation reform starts next month.

Commission competition officials privately admit that Van Miert's maximalist bid to dramatically lower the company turnover thresholds which trigger merger task force investigations now appears a non-runner after formal responses from national governments.

“The proposal needs a qualified majority and it is clear it would not get that at the moment,” said one. “Van Miert's fall-back proposal has become the forefront one,” added a national expert.

The UK, France and Germany have held firm on their initial opposition to Van Miert's bid to add between 65 and 80 cases a year to his merger task force workload by cutting turnover thresholds, according to Commission and national officials.

Investigations are currently sparked when company link-ups have a world-wide turnover of 5 billion ecu and the EU turnover of at least two of the companies involved is more than 250 million ecu.

Van Miert proposed in a Green Paper in March to slash the thresholds to 2 billion ecu and 100 million ecu respectively.

That demand will stay in Van Miert's proposal when it is presented to his Commission colleagues for clearance next month.

However, working group discussions starting on 26 July will now see national competition and DGIV experts focusing on his fall-back proposal for the Commission to take on multiple notifications - cases presented to more than one competition authority for clearance.

Initial discussion with national competition authorities has, however, led DGIV (Directorate-General for competition) to come up with a new proposal to tidy up the complicated treatment of company joint ventures.

This will replace the original raft of six suggestions in the Green Paper, although officials have refused to give details of the planned changes.

The Irish presidency, which has pencilled in more working groups on merger regulation reform for September and October, is prepared to give it “a run” but admits that hopes for getting a result by the end of the year are ambitious.

National governments are sending mixed signals on whether other competition issues will be dragged into the merger regulation debate.

Member state officials hint that Van Miert could call in some of the favours that recent high-profile state aid cases - and those in the pipeline - have offered him.

“We need Van Miert for some things,” said an official. “Van Miert might need us,” he added, in an apparent reference to Belgium's forthcoming battle to win unanimous EU backing for a state aid injection to rescue Walloon steel-maker Clabecq.

In a public spat last week, the Competition Commissioner was told by Walloon President Robert Collignon that he should be battling for Belgium in the Commission after Van Miert admitted initial doubts about Clabecq's case.

The Commission could expect nothing to be done without horse-trading, warned another national official. But DGIV and some government officials say there is no suggestion of any linkage with other state aid cases or side arguments such as the German cartel office's demand for an independent European agency.

“These are totally separate,” said a Commission official.

Germany offers some hope for DGIV that it can win over its critics. Hints are being dropped that the Bonn government takes a more positive view of Van Miert's proposals than the highly critical stance taken by Germany's cartel office might suggest.

“In the end it is the government, not the cartel office, that will have the final say,” said one Commission official.

Other sceptical countries, such as the UK and France, have already said that there is room to discuss Van Miert's fall-back position, although they see no need for Commission involvement in merger cases which can be settled bilaterally between national competition authorities.

DGIV wants wider powers to police mergers on the grounds that many cross-border European deals, especially in key emerging markets, are escaping its scrutiny under the current rules.

It says key areas where scrutiny should be stepped up include drugs, chemicals, auto components, mechanical engineering, biotechnology and publishing.