Short Reads

Court of Justice clarifies that a change from sole to joint control requires EU clearance only if the joint venture is "full-function"

Court of Justice clarifies that a change from sole to joint control r

Court of Justice clarifies that a change from sole to joint control requires EU clearance only if the joint venture is "full-function"

02.10.2017 NL law

On 7 September 2017, the European Court of Justice delivered its judgment on a request for a preliminary ruling by the Austrian Supreme Court on the interpretation of the EU Merger Regulation (EUMR). It confirmed that a change in the form of control from sole to joint control of an existing undertaking is considered a concentration under the EUMR only when the joint venture resulting from this transaction performs on a lasting basis all the functions of an autonomous economic entity in the relevant market and therefore qualifies as a full-function joint venture (FFJV).

The case before the Austrian Supreme Court originated from the notification by Austria Asphalt to the Austrian Federal Competition Authority of its acquisition of 50% of the shares in an existing asphalt mixing plant. At the time, the plant was solely owned by Teerag Asphalt, which would keep the other 50% of the shares. The asphalt mixing plant which was the object of the notification would supply only to its parent companies (and had only supplied its sole parent company Teerag Asphalt before the transaction). It therefore qualified as a non-FFJV.

Since a textual interpretation of the relevant articles of the EUMR did not provide a clear answer, the Court of Justice had to assess the purpose and general structure of the EUMR. It concluded that the concept of a concentration under the EUMR captures transactions that bring about a lasting change in the structure of the market. With regard to joint ventures, the Court then clarified that they fall within the ambit of the EUMR only if they perform on a lasting basis all the functions of an autonomous economic entity and therefore qualify as a FFJV.

In addition, the Court clarified that the EUMR does not make a distinction between a newly created joint venture and a joint venture that results from a change from sole to joint control.

Interestingly, in its judgment the Court dismissed the European Commission's view that a transaction involving a change in the form of control over an existing undertaking is always a concentration, regardless of whether the joint venture is full-function or not.

This article was published in the Competition Law Newsletter of October 2017. Other articles in this newsletter:

  1. Court of Justice landmark judgment: Intel's EUR 1.06 billion fine is sent back to the General Court
  2. Court of Justice upholds fine imposed on Philips and LG in the cathode ray tubes cartel
  3. Court of Justice provides guidance on examining excessive prices as abuse of a dominant position
  4. Curaçao Competition Act entered into force on 1 September 2017
  5. District Court of Rotterdam dismisses Vodafone claims of abuse of dominance by KPN

Related news

05.04.2022 NL law
Game on for gatekeepers: Digital Markets Act finalised

Short Reads - Now that political agreement has been reached on the final text, the Digital Markets Act (DMA) will enter into force soon. The DMA’s ex ante rules and obligations will apply next to the ad hoc EU and national competition rules. Time for big digital companies to take stock of the potential implications of these additional rules on their day-to-day business operations. See our infographic for a concise overview of the DMA.

Read more

04.04.2022 EU law
ACM jumps on gun-jumping bandwagon

Short Reads - Companies involved in multi-step acquisitions should beware of potential gun-jumping risks. The Dutch Authority for Consumers and Markets (ACM) has fined a trade association for failing to notify the acquisition of four pharmacies involving a consecutive partial resale. Unlike the European Commission’s gun-jumping fine for partial implementation of a concentration through a ‘warehousing’ two-step acquisition (see our July 2019 newsletter; appeal pending), the ACM’s fine relates to faulty turnover calculations due to an unmaterialized two-step transaction.

Read more

04.04.2022 EU law
The ECN+ Directive implemented in Belgium and introduction of merger filing fees

Short Reads - On 7 March 2022, the Act implementing the ECN+ Directive into Belgian law was published in the Belgian Official Gazette. The Act entered into force on 17 March 2022. Some of the key amendments include (i) the introduction of filing fees for the notification of a concentration, (ii) new fines and penalty payments (including clarifications on the leniency programme), (iii) new dawn raid powers and (iv) the introduction of a regulatory framework for mutual assistance and cooperation within the European Competition Network.

Read more