The major problem associated with the regulation of transnational mergers, which affect several national markets, is the allocation of jurisdiction. Each country concerned may wish to exert jurisdiction and apply its national competition law to regulate the anti-competitive effects a merger may have in its territory. However, this approach may lead to risks of inconsistent decisions regarding the legality of mergers. Indeed, the national competition laws applied by the regulating authorities may diverge in several aspects, which raise the likelihood of inconsistency.
The authors advocates the creation of an international merger control framework (IMCF) for the regulation of transnational mergers. This framework will rest on an informal and a formal pillar. The former includes non-legally binding competition principles. Consistency of these principles with the concepts of legitimacy and efficiency, as well as the presence of peer reviews and assistance programmes, should lower the risk of non-implementation. The formal pillar includes bilateral cooperation agreements which apply to merger affecting the countries which have concluded the agreements.
As essential pre-condition for the application of bilateral agreements, the level of cooperation achieved by such agreements should be at least equal to that ensured by the informal pillar. The last part of the study addresses and examines the long and complex processes in merger and acquisition (M&A) transactions. M&A arbitration faces certain difficulties during the transaction. Such difficulties the author seeks to underline. Two main problems of arbitration in M&A transactions, particullarly, have been covered. Firstly, the problem of consent in consolidation of parallel proceedings during M&A transactions, and, secondly parties' consent that validate arbitration agreements/clauses in “assignment” or “succession” after M&A transactions have been completed. The author also tries to clarify the content of consent of parties to a transaction. Finally, a criticism of parallel proceedings is enhanced.
Table of Contents
Chapter I
Introduction
1.1.The aim of this monograph
1.2.The problems regarding the regulation of transnational mergers
1.3.The structure of the book
Chapter II
The unilateral strategy
2.1.Introduction
2.2.The concept of extraterritorial jurisdiction
2.3.The grounds of extraterritoriality
A) The principle of objective territoriality
B) The doctrine of effects
2.4.The unilateral strategy and competition law
2.5.The US and EC positions for extraterritorial application of competition law
A) The position of the US
B) The position of the EC
2.6.Extraterritorial application of competition law to merger cases
A) The position of the US
B) The position of the EC
2.7.The demise of the unilateral strategy
2.8
Conclusions
Chapter III
A comparative analysis of EC and US merger control law: The institutional framework and procedural rules
3.1.Introduction
3.2.The history of US merger control law
3.3.The history of EC merger control law
3.4.Introduction to the EC/US bilateral cooperation
3.5.The institutional framework
A) Introductory remarks
B) The allocation of regulatory powers
C) The EC administrative regime
D) The US prosecutorial regime
E) Determination of the scope of application of merger control: qualitative and quantitative criteria
3.6.Procedural rules
A) Notification of merger operations
B) Investigation period
C) Notification form
3.7.Differences between EC and US institutional framework and procedural rules: Possible consequences on the outcome of mergers review
A) The powers of the European Commission
B) Role of competitors
C) Different timetable of merger control proceedings
3.8.Criticism of the EC Courts regarding Commission’s administration of merger control
3.9.The EC Regulation 139/2004, the Implementing Regulation n. 1269/2013 and its impact on the EC merger control regime
3.10.The soft law initiatives of the Commission to amend the EC merger control regime
3.11.Conclusions
Chapter IV
A comparative analysis of EC and US merger control law: The substantive rules
4.1.Introduction
4.2.Substantive assessment of mergers: Introductory remarks
A) The US substantive test
B) The EC substantive test
4.3.Definition of relevant markets
4.4.Evaluation of anti-competitive effects of mergers
A) The US approach
B) The EC approach
4.5.A comparative analysis of the scope of application of the market dominance test and of the substantial lessening of competition test
A) Monopolist scenario
B) Oligopolist scenario
C) The EC Regulations and the unilateral anti-competitive effects in oligopolies
4.6.The Boeing/McDonnell Douglas merger
A) The decision of the Federal Trade Commission
B) The decision of the European Commission
4.7.The General Electric/Honeywell merger
A) The decision of the Department of Justice
B) The decision of the European Commission
C) The judgement of the Court of First Instance
D) US criticism of the Commission’s decision
4.8.Regulation of foreclosure effects
A) The theory of conglomerate effects
B) The theory of conglomerate effects in the case law of the Commission
C) The theory of conglomerate effects in the case law of the EC Courts
D) The theory of conglomerate effects in the US
E) Comparing the EC and US positions for the assessment of conglomerate effects
F) Critical review of the foundations and practicability of the theory of conglomerate effects
4.9.The EC and US different approaches to regulation of mergers between large firms: Possible explanations
A) Goals of competition law
B) Different perception of market forces
C) Availability of post-merger remedies
D) Treatment of efficiencies
4.10.Final thoughts on convergence and divergence between EC and US merger control laws
4.11.Conclusions
Chapter V
A comparative analysis of merger control laws enacted by other jurisdictions
5.1.Introduction
5.2.Institutional frameworks
5.3.Procedural rules
A) Jurisdictional criteria
B) Merger notification regimes
C) Investigation period
D) Notification forms and filing fees
5.4.Substantive rules
A) Substantive tests for the assessment of mergers
B) Competition harms
C) Goals of competition law
5.5.Major implications of differences in national merger control laws
5.6.Conclusions
Chapter VI
The bilateral strategy
6.1.Introduction
6.2.The origins of bilateral cooperation
A) The first generation of bilateral cooperation agreements
B) The second generation of bilateral cooperation agreements
C) De facto application of the principle of comity
6.3.Contributions of the OECD to the development of international cooperation
6.4.The EC/US bilateral cooperation
A) The 1991 Cooperation Agreement
B) The 1998 Cooperation Agreement
C) Practical assessment of the EC/US bilateral cooperation in merger control
6.5.Regional trade Agreements
A) The Australia New Zealand Closer Economic Relations Agreement
B) Asian Regional Agreements
C) African Regional Agreements
D) American Regional Agreements
6.6.European Regional Agreements
A) Europe Agreements
B) Partnership and Cooperation Agreements
C) Euro-Mediterranean Partnership Agreements
6.7.Competition rules of the European Regional Agreements and regulation of transnational restrictive business practices
A) Pursuance of different level of harmonization
B) Objectives of Association Agreements
6.8.A critical review of competition rules of European Association Agreements and of Regional Trade Agreements
6.9.A Critical review of the bilateral strategy
A) Advantages of bilateral cooperation agreements
B) Disadvantages of bilateral cooperation agreements
6.10.The bilateral strategy and regulation of transnational mergers level of harmonization
Chapter VII
Multilateral strategy: Instruments of hard law
7.1.Introduction
7.2.First attempts to create multinational competition rules
A) The Havana Charter
B) The Draft International Antitrust Code
7.3.The first steps of the proposal for WTO competition rules: From the Van Miert Report to Singapore
7.4.Arguments for WTO competition rules
7.5.Arguments against WTO competition rules
A) Law-making problems
B) Misapplication problems
7.6.On the road towards Cancun Conference
7.7.The failure of the Cancun Conference. Is it the end of WTO competition rules?
7.8.And after Cancun?
7.9.An alternative approach for the creation of multilateral competition rules: The theory of market access developed by Professor Fox
A) Interaction between competition and trade law
B) The set of proposed international principles for regulation of transnational restrictive business practices
C) Some critical thoughts on the theory of market access
7.10. Multilateral instruments of hard law as regulatory tools for transnational Mergers. Prospects and problems
A) Unwillingness of countries to cede sovereignty to international bodies
B) Aversion to undertake legally binding commitments
C) The risk of “race to the bottom”
7.11.Conclusions
Chapter VIII
Multilateral strategy: Instruments of soft law
8.1.Introduction
8.2.The UNCTAD Set
A) Goals and contents
B) The UNCTAD set and regulation of transnational restrictive business practices
8.3.The initiatives of the OECD
A) Instruments adopted by the OECD
B) Evaluation of the OECD activities
8.4.The International Competition Network
A) The origin of the ICN
B) The ICN: A successful venture
8.5.Soft law international cooperation in the financial services sector
A) The Basle Committee
B) The IOSCO
C) The IAIS
D) Other relevant initiatives
8.6.Lessons from international cooperation in the financial services sector
8.7.Building a feasible international framework for regulation of transnational mergers
8.8.The definition of “transnational” mergers
8.9.The concepts of legitimacy and efficiency
8.10.The International Competition Principles
A) Conflict-of-jurisdiction rules
B) Principles regarding mergers notification
C) Principles regarding review period
D) Principles regarding notification forms
E) Other procedural principles
F) Principles regarding remedies
G) Principles regarding powers of competition authorities
H) Comments on the Recommended Practices
8.11.Harmonisation of substantive rules
A) Problems associated with harmonisation of substantive rules
B) An innovative approach to harmonisation
8.12.The extrinsic dimension of efficiency
A) The principle of conditionality
B) Technical assistance and capacity building programmes
C) Peer review systems
8.13.Arguments for the creation of the International Framework for Merger Control: A Summary
8.14.Conclusions
Chapter IX
Cooperation and coordination of arbitral proceedings in merger and acquisition transactions
9.1.Introduction
9.2.The Scope of Arbitration Clauses in M&A Transactions
9.3.Multiple Proceedings and Parallel Proceedings in M&A Transactions
9.4.Multi-Contract and “Group of Contracts” Doctrine in M&A Transactions
9.5.Parallel Proceedings in M&A Arbitration
9.6.Mechanism of Lis Pendens in M&A Arbitration
9.7.Buenaventura case
9.8.Fomento Case
9.9.Mechanism of Res Judicata in M&A Arbitration
9.10.Parallel Proceedings depending on related disputes
9.11.Solutions proposed by doctrine and case law in different jurisdictions for joinder of parallel proceedings
9.12.Advantages and disadvantages of consolidation in M&A arbitration
9.13.Consolidation in a single arbitration
9.14.Conclusions
Research Goal and Thematic Focus
The monograph explores potential regulatory strategies for transnational mergers by examining the challenges arising from multi-jurisdictional review and analyzing international cooperation mechanisms. The primary aim is to advocate for an International Merger Control Framework (IMCF) that balances institutional efficiency with respect for national sovereignty.
- The inadequacies and limitations of the unilateral, extraterritorial application of national competition laws.
- A detailed comparative analysis of EC and US merger control frameworks, including institutional settings and substantive rules.
- The effectiveness of existing bilateral cooperation agreements as a governance tool for transnational competition issues.
- Evaluation of potential multilateral strategies, contrasting "hard law" international treaties with "soft law" instruments.
- The specific procedural challenges of coordinating arbitral proceedings within the context of complex M&A transactions.
Abridged Excerpt
1.2.The problems regarding the regulation of trans-national mergers
Ictu oculi, the basic question that competition law enforcers and practitioners have to address when dealing with transnational mergers is which national competition authorities can exert jurisdiction on a given transaction. The identification of the competent competition authorities in transnational mergers is complicated by two factors. Firstly, transnational mergers affect several national markets; but, on the other side, the scope of application of national competition laws and of national merger control laws- is usually limited to the territory of the regulating countries. Secondly, the great number of countries that have adopted competition law in their national legal systems must be borne in mind. Some scholars have estimated that in 2002 about 90 countries have enacted competition law and many more are planning to do so. As of March 2006, almost 100 competition authorities have joined the International Competition Network. Thus, if a merger affects several national markets, the competition authorities of the countries where such effects are felt may wish to regulate this operation with the aim of protecting their national economic interests.
Transnational mergers are therefore likely to be subjected to the review of several national competition authorities, each applying their respective national competition laws. National laws, however, may regulate the various aspects of merger control regime differently, such aspects ranging from procedural to substantive rules; from policy goals to the allocation of regulatory powers.
The multi-jurisdictional review of trans-national mergers can raise several problems which may be subsumed into three general categories:
A) Legal problems. The regulating competition authorities may take inconsistent decisions on the validity of mergers. For example, one authority may decide to approve an operation, another authority may decide to disallow it, while a third authority may decide to conditionally authorize the merger.
Summary of Chapters
Chapter I: Defines the scope of the study, highlighting the increasing international breadth of business activities and the associated challenges for competition law enforcers.
Chapter II: Examines the unilateral strategy, discussing extraterritorial jurisdiction and the doctrine of effects under public international law.
Chapter III: Provides a comparative institutional and procedural analysis of EC and US merger control laws, identifying areas of convergence and divergence.
Chapter IV: Analyzes the substantive rules in EC and US merger control, focusing on market dominance, anti-competitive effects, and conglomerate merger theories.
Chapter V: Extends the comparative analysis to various other national jurisdictions, exploring their institutional frameworks and substantive assessment tests.
Chapter VI: Studies the bilateral strategy, tracing the history of cooperation agreements and their practical role in managing transnational merger enforcement.
Chapter VII: Evaluates the multilateral strategy based on instruments of hard law, covering historical proposals like the Havana Charter and WTO-based initiatives.
Chapter VIII: Discusses the multilateral strategy based on instruments of soft law, emphasizing the role of organizations like the ICN and potential future international frameworks.
Chapter IX: Addresses the specific procedural complexities of arbitral proceedings in M&A transactions, proposing methods for coordinating parallel arbitrations.
Keywords
Transnational mergers, Merger control, Competition law, Extraterritorial jurisdiction, Multilateral cooperation, Bilateral agreements, Soft law, International Competition Network, ICN, Substantive tests, Market dominance, Arbitration, M&A transactions, Regulatory framework, Antitrust policy.
Frequently Asked Questions
What is the fundamental problem addressed in this book?
The book addresses the challenges of regulating transnational mergers that impact multiple national markets, specifically focusing on the jurisdictional conflicts and potential for inconsistent regulatory decisions caused by the unilateral application of national competition laws.
Which strategies for regulating transnational mergers are discussed?
The author identifies and evaluates three main categories of regulatory approaches: the unilateral strategy (extraterritorial application), the bilateral strategy (inter-agency cooperation agreements), and the multilateral strategy (involving both hard and soft law instruments).
What is the author's primary objective or proposal?
The author advocates for an "International Merger Control Framework" (IMCF). This framework would rely on two pillars: an informal pillar consisting of international competition principles (soft law) and a formal pillar utilizing existing bilateral cooperation agreements.
How does the work approach the comparative analysis of US and EC laws?
The analysis is divided into two distinct parts: institutional/procedural rules (covering notification, investigation, and the role of competitors) and substantive rules (focusing on assessment standards, market definition, and conglomerate merger theory).
What is the focus of the final chapter?
The final chapter focuses on the complexities of parallel arbitral proceedings in M&A transactions, specifically addressing how to handle multiple, potentially contradictory disputes arising from interrelated contracts in different jurisdictions.
What characterizes the proposed regulatory model?
The proposed model is characterized by its flexibility and reliance on soft law, aiming to foster mutual trust, harmonize procedural methodologies, and mitigate jurisdictional overreach without unduly infringing upon national sovereignty.
How does the author characterize the 'unilateral strategy'?
The author views the unilateral strategy as problematic because it often creates legal uncertainty, increases compliance costs for firms, and risks diplomatic tensions due to the conflicting national economic interests pursued by competing authorities.
What role does the International Competition Network (ICN) play in this study?
The ICN is highlighted as a successful example of a soft law approach, praised for its consensus-based, project-oriented nature and its ability to gather a heterogeneous membership to formulate best practices in merger notification and procedural transparency.
- Quote paper
- Dimitris Liakopoulos (Author), 2017, A comparative analysis of EU and US transnational mergers regulation, Munich, GRIN Verlag, https://www.grin.com/document/384880
