The tougher environment for antitrust merger reviews isn’t limited to the United States. This Davis Polk memo says that recent amendments to the European Commission’s referral policy that will allow it to review so-called “killer acquisitions” (i.e., those in which major players target nascent competitors) that would have previously evaded merger review.
The changes to the policy will permit the EC to accept referrals from national competition authorities of deals that merit review at the EU level, even if those national authorities lack the power to review them on their own. This excerpt from the memo discusses the type of deals at risk for review:
The EC is primarily interested in reviewing deals where: (i) a target’s revenues are not reflective of its actual or future competitive potential, as may be recognized in total deal value; and (ii) the transaction potentially raises substantive issues requiring examination. Deals involving start-ups, recent market entrants, important innovators and/or companies with access to competitively significant assets (e.g., raw materials, infrastructure, data or intellectual property rights) are likely to be candidates for referral, particularly when being acquired by already well-established market players.
The memo walks through the review procedures and timing, addresses how to account for referral risk in deal documents, and discusses the advisability of voluntarily engaging with the EC shortly after signing in order to confirm that there will be no review of the transaction.
– John Jenkins