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The postman will no longer ring twice: Minister unblocks postal merger

The postman will no longer ring twice: Minister unblocks postal merger

The postman will no longer ring twice: Minister unblocks postal merger

03.10.2019 NL law

The Dutch Authority for Consumers and Markets (ACM) recently blocked postal operator PostNL's acquisition of its only national competitor, Sandd, because this would create "a monopolist on the postal delivery market". However, the Dutch Minister of Economic Affairs and Climate Policy has overruled the ACM's decision on grounds of public interest. Invoking industrial policy or public interest reasons for merger clearance seems to be catching on.

Although it is too early to tell whether non-competition related arguments will be heard more easily than was previously the case, companies should be aware that public interest reasons can be considered when contemplating a merger.

ACM blocks PostNL/Sandd merger

After in-depth research, which was verified by independent economic experts, the ACM rejected PostNL's planned acquisition of Sandd. According to the ACM, the efficiencies gained from establishing a single postal network following the proposed PostNL/Sandd merger would fail to offset the anticipated price increases for consumer and business mail. Competitive pressure on PostNL's postal prices is mainly exerted by Sandd, with digital mail only having limited disciplinary effects. Despite decreasing postal volumes, the ACM expects PostNL's postal activities to remain profitable in both the short and long term, meaning any PostNL/Sandd merger is therefore unnecessary for PostNL's continued fulfilment of its statutory universal service obligation.

Minister unblocks blocked PostNL/Sandd merger

PostNL and Sandd argued that their merger is necessary to keep the postal services "reliable, accessible and affordable, across both urban and rural areas, safeguarding a sustainable postal service for all, including the elderly and socially vulnerable groups". Since the ACM can only take competition interests into account in its merger review, it was for the Dutch Minister of Economic Affairs to decide that the continuity of the postal services did indeed outweigh the competition issues identified by the ACM. The Minister's approval for the merger was granted under strict conditions regarding price increases and network access.

The Minister has never before overruled the ACM to clear a prohibited merger. It remains to be seen whether the unblocking is a sign of increased willingness to overrule merger prohibitions for public interest reasons.

Wider unblocking possibilities?

Many EU member states have means, similar to those in the Netherlands, to intervene in national merger control cases. In addition, the EU Merger Regulation provides member states with the option to take appropriate measures to protect legitimate national interests in merger reviews at EU level. So far these powers have been used only rarely; the most recent example is the German Minister of Economic Affairs' clearing, on the basis of environmental policy reasons, a blocked joint venture between two bearings producers.

However, recent calls for a stronger European industrial policy – see the Franco-German manifesto and the European Council's 2030 vision – may lead to intensified application of these powers. There have also been suggestions to revise the EU merger control rules to take greater account of non-competition related considerations when assessing mergers (see also 'Margrethe Vestager plays matchmaker between enforcement and regulation' included in this Newsletter).

Time will tell whether the unblocking possibilities are widened. For now, it would be a great help to companies if the conditions and procedures for obtaining merger clearance on public interest grounds were further specified. This would provide more clarity on when, and how, companies can rely on these reasons. Even so, it is worthwhile for companies to take these non-competition related reasons on board when contemplating a merger.

This article was published in the Competition Newsletter of October 2019. Other articles in this newsletter:

 

 

 

 

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