ECJ Advocate General: No Gap-Closing under EUMR

Oct 28, 2022 Benn-Ibler Rechtsanwälte

In a recent Opinion, Advocate General Kokott takes the view that a merger of businesses can be reviewed under Article 102 of the Treaty on the Functioning of the European Union (TFEU) even if a merger does not meet the turnover thresholds for applicability of the EU Merger Regulation (EUMR). In this respect, the EUMR does not have a gap-closing effect.

The initial case, which eventually ended up before the European Court of Justice (ECJ), originated in France. In 2004, the market for terrestrial television broadcasting (DVB-T) was liberalised in France. At that time, three providers were still active on the market: Towercast (the complainant in the pending case), TDF, and Itas. In 2016, TDF took over its competitor Itas and was thus able to significantly expand its dominant position.

The turnover thresholds for the applicability of EUMR (Art 1) were not reached and there was no referral of the case to the EU Commission under Art 22 EUMR. Therefore, no prior review of the merger was carried out. As a consequence, Towercast complained against the non-rejection of the merger.

The French Competition Authority acknowledged TDF's dominant position, but would only look into this matter if anti-competitive behaviour unrelated to the merger would manifest.

Advocate General Kokott does not share the opinion of the French Competition Authority, saying:

Although Article 21 EUMR excludes the application of other provisions of secondary law (including Regulation No 1/2003) to mergers, this is not applicable to Article 102 TFEU (dominance-abuse control), which is directly applicable under primary law, due to Union law hierarchy. Thus, mergers of companies for which ex-ante control is excluded due to the lack of applicability of the EUMR can also be examined ex-post for abuse of a dominant position (Art 102 TFEU). Merger clearance under the EUMR, on the other hand, excludes abuse within the meaning of Art 102 TFEU.

It remains to be seen whether the ECJ will follow Ms. Kokott’s Opinion.

Opinion, C-449/21 (13 October 2022)