Alternative Merger Control Thresholds in Technology Markets

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UNIVERSITY OF AMSTERDAM / UNIVERSITEIT VAN AMSTERDAM

FACULTY OF LAW

European Competition Law and Regulation Master Track

Master’s Thesis

ALTERNATIVE MERGER CONTROL THRESHOLDS IN

TECHNOLOGY MARKETS

Sanem Koçak

Supervised by Dr. Daniela Obradovic

Submitted on 27.07.2018

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TABLE OF CONTENTS

ABSTRACT………. 3 LIST OF ABBREVIATIONS………. 4 INTRODUCTION ... 5 CHAPTER 1 - The global shift from traditional markets to technology markets in today’s world and the increasing importance of merger and acquisition transactions therein .... 8 CHAPTER 2 - Turnover as the notification criteria in EU merger control ... 13 CHAPTER 3 - Inadequacy of the existing EU merger control threshold criteria in technology markets and the need for adjustment thereof ... 18 CHAPTER 4 - Recommendations concerning alternative merger control thresholds in technology markets ... 26 CONCLUSION ... 31 BIBLIOGRAPHY ... 32

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ABSTRACT:

The merger control thresholds contained in the current EC Merger Control Regulation (Council Regulation (EC) No 139/2004) are solely based on the turnover figures of the transaction parties; however, as this thesis will argue, the current turnover-based thresholds are outdated and are not capable of fully capturing the scale of merger/acquisition transactions taking place in technology markets where the target usually generates little revenue, regardless of its strategic importance or market power. The insufficiency of these static turnover-based notification threshold criteria has already come under the European Commission’s scrutiny and has been the subject of the European Commission’s request for “Consultation on Evaluation of Procedural and Jurisdictional Aspects of EU Merger Control”. Accordingly, this thesis proposes that, in order to maintain the competitive structure in technology markets, which mainly concern innovative products and technologies, new alternative merger control criteria should be introduced to the EUMR; allowing the Commission to properly and accurately review those transactions that are likely to disrupt the competition in technology markets.

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LIST OF ABBREVIATIONS

CJEU Court of Justice of the European Union

EC European Commission

EEA Agreement The Agreement on the European Economic

Area

EEC Treaty The Treaty establishing the European

Economic Community or the Treaty of Rome

EU European Union

EUMR Council Regulation (EC) No 139/2004 of 20

January 2004 on the Control of Concentrations Between Undertakings or the European Union Merger Regulation

GDP Gross Domestic Product

M&A Mergers and Acquisitions

NCA National Competition Authority

TFEU The Treaty on the Functioning of the EU

UK United Kingdom

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INTRODUCTION:

Merger control refers to the limb of competition law that deals with the review of mergers and acquisitions to determine whether they are to produce anti-competitive consequences, such as “price increases for consumers, decreases in the quality of products or services offered, lowered incentives for investment or innovation and the creation of market entry or exit barriers.”1 What is aimed by merger control is to make sure that a merger or an acquisition does not create or strengthen a dominant position in a given market, which is likely to produce detrimental effects on consumer welfare.

In terms of merger control regimes, there are usually two aspects that determine the evaluation of the transactions: first, the thresholds for notification, which establishes the transactions that are to be notified to a competition authority for review; and second, the substantive criteria, which concerns the manner and the criteria to be taken into consideration when a notified transaction is under review.2

In the European Union, the current legislative framework determining the transactions to be notified to and reviewed by the European Commission, i.e. the transactions which have a ‘community-dimension’, is “Council Regulation (EC) No 139/2004 of 20 January 2004 on the Control of Concentrations Between Undertakings” (the EC Merger Regulation or EUMR3). The initial EUMR, established in 1989 after a long period of rejected drafts and negotiations, was introduced to address the gap in European competition law with respect to merger control, and aimed “to provide a means to prevent concentrations that would have an adverse impact on competition, and to provide a single framework within which such transactions could be assessed (the ‘one-stop shop’ principle).”4

The introduction of notification thresholds, in order to establish Community jurisdiction with respect to mergers and acquisitions, serve to fulfill two main purposes: “first, a division of Community and Member State competence in merger control, and, secondly, an identification of those mergers likely to raise competitive concerns within the Common Market.”5

Due to the different political and economic incentives of the Member States in voting and negotiating for producing the initial EUMR, the test establishing the Community jurisdiction was solely based on a very static and simple criterion as the turnover of the transaction parties,

1 _{Yavuz Karagök & Samuel Rutz, “Towards optimal merger notification regimes: evidence from}

Switzerland”, Journal of Antitrust Enforcement, Volume 2, Issue 2, 1 October 2014, p. 451.

2 _{Yavuz Karagök & Samuel Rutz, “Towards optimal merger notification regimes: evidence from}

Switzerland”, Journal of Antitrust Enforcement, Volume 2, Issue 2, 1 October 2014, p. 451, 452.

3

Council Regulation (EC) No 139/2004 of 20 January 2004 on the Control of Concentrations between Undertakings.

4_I_{onnis Kokkoris & Howard Shelanski, “EU Merger Control, A Legal and Economic Analysis”, [2014]}

Oxford University Press p. 25.

5 _{Reyaz A. Kassamali, “From fiction to fallacy: reviewing the E.C. Merger Regulation’s Community}

dimension thresholds in the light of economics and experience in merger control”, European Law Review 1996, 21 Supp. (Competition law survey 1996), CC89-114, p. 17.

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in an attempt to “identify those transactions that have an appreciable economic impact on the Community.”6

This thesis aims to show which new alternative merger control thresholds should be introduced to the currently applicable EUMR in order to better capture the transactions in technology markets and be appropriate for their control. This thesis argues that the currently applicable EUMR, based solely on the turnover figures of the transaction parties, are not the appropriate and sufficient means for capturing the mergers and acquisitions taking place in technology markets. The insufficiency of the turnover based thresholds is especially crucial for the transactions taking place in technology markets because, due to the nature of their services, they often involve undertakings with low turnover figures, which are likely to escape from the high turnover based merger control thresholds under the EUMR, even if they hold a significant place in the market. Accordingly, this thesis will aim to demonstrate that, in an effort to better capture the developments in technology markets and be appropriate for their control, certain new supplementary threshold criteria should be introduced. This thesis suggests that, with respect to the transactions in technology markets, introduction of supplementary merger control thresholds based on ‘transaction value’ and ‘number of users’ will be more suitable and accurate in detecting the transactions that are to be brought under the Commission’s scrutiny.

This thesis is based on a normative analysis method. The existing legal framework on EU merger control thresholds, as well as the memorandums, will be examined to understand the rationale leading to the initial decision of establishing turnover based merger control thresholds, and to demonstrate the incapability of these outdated thresholds in capturing the transactions taking place between the players in today’s contemporary technology markets. The insufficiencies arising from the application of turnover based thresholds are also demonstrated through recent high-profile cases concerning technology markets which have triggered the question of the effectiveness of these thresholds. Moreover, reports and empirical studies pertaining to the changing market structures and, thus changing merger trends, are used to further demonstrate the incompetency of turnover based thresholds in capturing such transactions whose magnitude is defined by innovation and technological developments, rather than turnover. The criticisms and opinions of academics and public officials on the insufficiency of turnover based thresholds are also included to further highlight the need to introduce alternative criteria with respect to these markets. In terms of the recommendations, the responses submitted to the Commission with respect to its consultation request on the issue, along with the legislations of the Member States which have recently introduced alternative threshold criteria based on transaction value were taken as inspiration.

This thesis consists of four main chapters, followed by a conclusion. Chapter 1 provides general information on the change that has been observed in the market structures and market players in the past thirty years and the increasing importance of mergers and acquisitions in technology markets throughout this period. Chapter 2 delivers information on the framework of the

6_I_{onnis Kokkoris & Howard Shelanski, “EU Merger Control, A Legal and Economic Analysis”, [2014]}

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currently applicable merger control thresholds and the rationale behind adopting merger control thresholds based on turnover. Chapter 3 aims to demonstrate the need for introducing new threshold criteria by way of presenting the shortcomings of the existing turnover based thresholds in recent cases, as well as detecting the concerns that are likely to arise in future transactions. Chapter 4 contains recommendations for eliminating the insufficiencies arising from the current framework, and suggests introducing new threshold criteria with respect to technology markets, based on transaction value and number of users. Lastly, conclusion contains a final outlook on the current state of the EU merger control thresholds and presents the benefits that will arise as a result of the introduction of new threshold criteria.

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Chapter 1 – The global shift from traditional markets to technology markets in today’s world and the increasing importance of merger and acquisition transactions therein:

In today’s world, there is no doubt as to the increasing influence of technology, and technology companies, in the daily lives of consumers. The rapid parallel increase in technological advancements and globalization has led technology markets to develop their own market structures, which have placed antitrust enforcement in a much more significant place “in the efficient policing of markets”7. The brisk and unique nature of technology markets have produced the need to update the various legal frameworks governing these contemporary new-age companies in order to better address and cover their functions.

This need in the legal area with respect to technology markets shows to be especially crucial when considering that technology markets are rapidly and increasingly replacing the strong places once held by classical industries at the world markets. The importance of introducing new legal solutions encompassing today’s contemporary technology markets becomes clearly visible when the five largest companies from 2006 and 2017 are compared with each other: In 2006, the largest five companies in the world were mainly consisting of companies active in the conventional markets of the 20th century, namely Exxon Mobil, General Electric, Microsoft, Citigroup and Bank of America; whereas in 2017, in just eleven years, the same list is made by Apple, Alphabet (Google), Microsoft, Amazon and Facebook8. In addition to being the five largest companies in the world, the products and services offered by all five of these companies are also among the most commonly and widely used products and services throughout the globe, which puts them in an even more significant place. Accordingly, merger and acquisition transactions involving parties operating in technology markets, and especially those which involve the largest five companies in the world, makes merger control have an essential and strategic role in the policing of these markets, as will be explained in detail below.

Mergers and acquisitions have been and continue to be an important instrument for companies in terms of inorganic growth, as such actions provide companies with an immediate growth opportunity9, which has been proven by a number of event studies conducted as back as the 1980s10. In terms of technology markets, the importance of mergers and acquisitions have an

7_{L. Lanucara, “The Globalization of Antitrust Enforcement: Governance Issues and Legal Responses”,}

Indiana Journal of Global Legal Studies, Volume 9, Issue 2, [Spring 2002], p. 438. Also available at:

https://www.repository.law.indiana.edu/cgi/viewcontent.cgi?article=1242&context=ijgls 8

Jonathan Taplin, “Is it Time to Break Up Google?”, The New York Times, 22 April 2017, available at: https://www.nytimes.com/2017/04/22/opinion/sunday/is-it-time-to-break-up-google.html. See also: S&P Dow Jones Indices.

9_{Ionnis Kokkoris & Howard Shelanski, “EU Merger Control, A Legal and Economic Analysis”, [2014]}

Oxford University Press p. 2.

10_{For example, see: Ionnis Kokkoris & Howard Shelanski, “EU Merger Control, A Legal and Economic}

Analysis”, [2014] Oxford University Press p. 6, 7; M. Bradley, A. Desai, and E. Han Kim, ‘Synergistic Gains from Corporate Acquisitions and their Division between the Stockholders of Target and Acquiring firms’, [1988] 21 Journal of Financial Economics, 3-40; M. Jensen and R. Ruback, ‘The Market for Corporate Control’, [April 1983] Journal of Financial Economics, 5-50; G. A. Jarrell, J. A. Brickley, and J. M. Netter, ‘The Market for Corporate Control: The Empirical Evidence since 1980’, [Winter 1988] 12(1) Journal of Economic Perspectives 49-68.

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even greater impact for the parties involved. Considering the fact that the increase in technological change is decreasing the product life cycle in technology markets11_{, companies} are competing not only for the capacity to innovate but also for the speed of innovation12, which is easier to achieve through merging with or acquiring companies that are capable of providing the necessary tools, and especially know-how, which is the key component of innovation. These incentives for technology companies, coupled with the extremely high amounts of profits made in return of the relatively low costs for making products, places mergers and acquisitions involving technology parties at an even more significant place, considering the rates of profit reap derived from their products. In other words, having “highly scalable products, low deployment costs, and generous profit margins” make technology, and especially software companies, more attractable to investors and potential buyers due to their favorable economics13.

To provide an example, when the 2016 market cap per employee values of General Motors and Facebook are compared, it can be seen that with 215,000 employees, “General Motors created economic value of approximately $231,000 per employee (market cap/workforce)”14 whereas Facebook, with 17,048 employees, has created an entity worth $20.5 million per employee, which is almost a hundred times the value per employee of one of the household companies of the last century15. Similarly, between the dates April 1, 2013 and April 1, 2017 it has been observed that “Amazon, Facebook, Google and Apple have cumulatively increased in value by approximately $1.3 trillion, which is equal to the GDP of Russia”16.

In addition, we have also entered an era where acquiring technology targets have become the most feasible option for companies operating in all kinds of different sectors, which are seeking “to boost innovation, streamline operations and processes, shape customer journeys, and personalize products, services, and experiences”17. Technology mergers and acquisitions are

11_{Odilon Patrick Lemieux, John C. Banks, [2007] “High tech M&A – strategic valuation”, Management}

Decision, Vol. 45 Issue: 9, pp.1412-1425, available at:

https://www.emeraldinsight.com/doi/full/10.1108/00251740710828672.

12

Odilon Patrick Lemieux, John C. Banks, [2007] “High tech M&A – strategic valuation”, Management

13 https://www.bcg.com/publications/2017/corporate-development-finance-technology-digital-2017-m-and-a-report-resurgent-high-tech-marketplace.aspx [website] accessed on 14.05.2018.

14 _{Scott Galloway, “The Four: The Hidden DNA of Amazon, Apple, Facebook and Google” [2017],}

Bantam Press, p. 6. Also see: Forbes, May 2016, available at:

https://www.forbes.com/companies/general-motors.

15

Scott Galloway, “The Four: The Hidden DNA of Amazon, Apple, Facebook and Google” [2017], Bantam Press, p. 6. Also see: Facebook, Inc., available at: https://newsroom.fb.com/company-info/ and Yahoo! Finance, available at: https://finance.yahoo.com.

Bantam Press, p. 7. Also see: Yahoo! Finance, available at: https://finance.yahoo.com and “Report for Selected Countries and Subjects”, International Monetary Fund, October 2016, available at:

http://bit.ly/2eLOnMI.

17 https://www.bcg.com/publications/2017/corporate-development-finance-technology-digital-2017-m-and-a-report-technology-takeover.aspx [website] accessed on 02.05.2018.

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also strong strategical tools for companies in “filling holes in the product offering, opening new markets and creating new capabilities (Frick and Torres, 2002)”18_{. Among the total of} $2.5 trillion completed merger and acquisition transactions in the year 2016, 30% of these transactions consisted of technology deals19; and furthermore, nearly 70% of all the tech deals that took place in 2016 involved buyers that are not operating in the technology sector20. These numbers show that, for an increasing number of companies that are thriving to digitalize their services in order to keep up with the changing market structures of today’s world, “the answer is to buy rather than to build”21. Deloitte’s 2018 M&A trends report22 suggests that “acquiring technology assets now ranks number one as strategic driver of M&A deals”23. The report also states that twenty percent of the participants in the report have indicated “the acquisition of technology assets as the principal reason behind deals”, which has been at “six percent in the spring of 2016”. Furthermore, the same report provides that seeking “to acquire technology” and “to build out a digital strategy” are also the most cited motivations for corporate respondents in pursuing deals24.

According to the 2016-2017 Global Technology M&A Report conducted by Mooreland Partners25_{, the technology M&A market “remained robust throughout 2016 and 2017”} following the record level that has been reached in 201526. Between the years 2012 and 2017, the total number of technology deals has been growing 9% per year27. Moreover, large-cap technology deals – which are valued more than $500 million – have had a growth rate of more

18_{Odilon Patrick Lemieux, John C. Banks, [2007] “High tech M&A – strategic valuation”, Management}

19

https://www.bcg.com/publications/2017/corporate-development-finance-technology-digital-2017-m-and-a-report-technology-takeover.aspx [website] accessed on 02.05.2018.

22

Deloitte, The State of the Deal: M&A trends 2018, available at:

https://www2.deloitte.com/us/en/pages/mergers-and-acquisitions/articles/ma-trends-report.html

[website] accessed on 14.05.2018.

23 _Deloitte, _The _State _of _the _Deal: _M&A _trends _2018, _available _at: https://www2.deloitte.com/us/en/pages/mergers-and-acquisitions/articles/ma-trends-report.html

24 _Deloitte, _The _State _of _the _Deal: _M&A _trends _2018, _available _at: https://www2.deloitte.com/us/en/pages/mergers-and-acquisitions/articles/ma-trends-report.html

25

http://fortune.com/2018/01/11/tech-ma-deals-2018-startup-innovation/ [website] accessed on 14.05.2018 and http://www.moorelandpartners.com/press/mooreland-partners-publishes-global-technology-ma-report/ [website] accessed on 14.05.2018.

26 _{http://fortune.com/2018/01/11/tech-ma-deals-2018-startup-innovation/}_{[website] accessed on}

14.05.2017 and http://www.moorelandpartners.com/press/mooreland-partners-publishes-global-technology-ma-report/ [website] accessed on 14.05.2018.

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than 13% per year28. This growth in large-cap technology deals have also triggered the aggregate deal values to increase from $278 billion to $717 billion, constituting a growth rate of 27% per year29.

Another trend that is being observed in the transactions concerning the technology markets is the start-up acquisition trend, where technology start-up companies that create innovative key technologies – but lack the turnover due to the nature of their products and their short-term of existence – are acquired by the largest technology companies in the world30; which results in large technology companies acquiring competitively strategic technology without having to notify the European Commission, due to the low turnover amounts of the targets. This trend is especially critical from the consumers’ point of view, considering that the acquired innovative products and technologies of start-up companies are utilized into the already existing operations of large technology firms – and are consequently deprived of their intended use – even before they reach the consumers.

When the unique structure of the technology markets is taken into consideration, it can be argued that having access to key technologies and know-how carries more weight in determining the actual market power of a technology company, rather than its turnover. As stated in the Guidelines on the assessment of horizontal mergers, “effective competition may be significantly impeded by a merger between two important innovators, for instance between two companies with ‘pipeline’ products related to a specific product market.”31 That is why the effective application of merger control is crucial for technology markets; Even without holding a dominant position, the players in the market can easily monopolize the access to certain technologies and know-how through acquisitions, which will not be subject to the Commission’s scrutiny due to the low turnover figures of the targets. In other words, in technology markets the determinant factor of market power is access to technology, irrespective of the turnover figure.

Interim Conclusions:

In light of the considerations above, it is undeniable that in today’s highly globalized and digitalized world, mergers and acquisitions hold an especially significant place in terms of the business strategies of companies operating in technology markets, and therefore, it is crucial to maintain the efficient functioning of these markets by making sure that such transactions – which mainly concern innovative and cutting-edge products and technologies – do not escape

29

https://www.bcg.com/publications/2017/corporate-development-finance-technology-digital-2017-m-and-a-report-resurgent-high-tech-marketplace.aspx [website] accessed on 02.05.2018.

30_{Please see the following link for a list of the start-up acquisitions of large technology companies in}

2017: https://venturebeat.com/2017/12/26/15-european-startups-bought-by-big-u-s-tech-firms-in-2017/.

31 _{Guidelines on the assessment of horizontal mergers under the Council Regulation on the control of}

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the merger control scrutiny of the European Commission, so that their potential anti-competitive effects on the markets and consumers are thoroughly evaluated. That said, by their nature, companies that are active in technology markets usually do not charge their end users for their products or services, which gives rise to the imminent danger of transaction parties involved in such transactions not being able to fulfill the turnover based merger control thresholds provided under the currently applicable EU Merger Control Regulation. Thus, for the effective functioning of the technology markets, for the sake of maintaining both the effective competition in the market and the the welfare of the consumers, it is necessary to introduce new alternative thresholds that will ensure the proper observation of merger control in technology markets.

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Chapter 2 – Turnover as the notification criteria in EU merger control:

Measuring the predicted effects of mergers and acquisitions in the markets are particularly difficult, considering that nearly all merger control is “forward-looking” or “prophylactic”32. Therefore, with respect to merger control, the European Commission undertakes the task of making predictions on placing “financial values on the market power and efficiency effects”, which makes merger control uncertain and speculative in nature33_{. This already difficult task} becomes more challenging when the effects of a merger involving innovation is in question, as the efficiencies that are expected to arise are “often not verifiable and do not always materialize”34.

As explained in Chapter 1 above, mergers and acquisitions play a significant role in terms of the growth and expansion of companies, as they provide companies with quick and profitable solutions needed for implementing their corporate strategies. When this significant role, coupled with the imprecise and predictive nature of merger control is taken into consideration, one would expect merger control to be one of the most prioritized areas of EU competition law. However, the long and rocky road leading to the establishment of the initial EUMR, as well as the conservative state of the currently applicable merger control threshold criteria determining those transactions requiring for a notification to be made to the European Commission, show that merger control has been and continues to be a neglected area of EU Competition Law. Indeed, while the United States had merger control regulations in place since 1914, the EU has introduced merger control only in 198935, which means that merger control in Europe has been established “more than 70 years after the development of merger control in the US.”36_Claydon (1986)37 argues that the lack of merger control poses a substantial logical obstacle to the rational development of competition policy.

That said, it should also be noted that the European merger control system differs from other regulatory systems as, in addition to efficient functioning and maintenance of the competitive market structure, it is also pursuing market integration.38 Accordingly, within the scope of the EU merger control regime, mergers and acquisitions are considered to be able to serve as “both

32_{A. Lindsay, “The EC Merger Control Regulation: Substantive Issues”, [2006] Second Edition, Sweet}

& Maxwell, p. 25.

33

A. Lindsay, “The EC Merger Control Regulation: Substantive Issues”, [2006] Second Edition, Sweet & Maxwell, p. 25.

34_{A. Lindsay, “The EC Merger Control Regulation: Substantive Issues”, [2006] Second Edition, Sweet}

& Maxwell, p. 26.

35

Ionnis Kokkoris & Howard Shelanski, “EU Merger Control, A Legal and Economic Analysis”, [2014] Oxford University Press p. 18.

36

Ionnis Kokkoris & Howard Shelanski, “EU Merger Control, A Legal and Economic Analysis”, [2014] Oxford University Press p. 17.

37_{J. M. Claydon, ‘Joint ventures – an analysis of Commission decisions’ [1986] 7(2) ECLR, 151-92.} 38_{Reyaz A. Kassamali, “From fiction to fallacy: reviewing the E.C. Merger Regulation’s Community}

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mechanisms of and obstacles to integration.”39 This dual functionality of European merger control has also been recognized by the Commission among the fundamental objectives of the Merger Regulation40:

“allowing concentrations which bring about necessary corporate reorganizations in the

Community as a result of the opening of national markets to Community and world markets, while prohibiting or modifying concentrations which are likely to result in lasting damage to effective competition in the common market or in a substantial part of it.”41

The process of adopting a common merger control regulation has been a particularly challenging in the EU in consequence of this dual functionality mentioned above, as the Member States have had a hard time finding a common ground with respect to the “final authority over mergers to rest with the Commission.”42 Consequently, following several attempts43, including a good amount of failed drafts and proposals, and with the CJEU repeatedly providing the Commission with sufficient ammunition to claim jurisdiction over competitively significant mergers and acquisitions in a number of cases44_{, the first EU-wide} merger control mechanism, namely Regulation No. 4064/89, was adopted on 21 December 1989, which established merger control thresholds solely based on turnover, in an effort to eliminate the dissension between the Commission and the Member States by way of providing a simple and clear-cut distinction mechanism for those transactions that are to fall under the Commission’s jurisdiction.

Against the foregoing, it can be concluded that, the Commission has opted for using turnover figures – which are suitable to measure the sizes of the transaction parties and not their market positions and their impact on the markets – especially “because the Commission felt it lacked the experience in economics necessary to perform speedy and uncontested market share

39_{Reyaz A. Kassamali, “From fiction to fallacy: reviewing the E.C. Merger Regulation’s Community}

40

Reyaz A. Kassamali, “From fiction to fallacy: reviewing the E.C. Merger Regulation’s Community dimension thresholds in the light of economics and experience in merger control”, European Law Review 1996, 21 Supp. (Competition law survey 1996), CC89-114, p. 4.

41 _{Commission of the European Communities, Community Merger Control, COM (93) 385 (1993,}

OOPEC, Luxembourg), p. 4.

42

Ethan Schwartz, “Politics as Usual: The History of European Community Merger Control”, 18 Yale J. Int'l L. 607 [1993], p. 624.

43

Commission Proposal for a Regulation (EEC) of the Council on the Control of Concentrations Between Undertakings, 16 O. J. EUR. COMM. (No. C 92) 1 (1973), amended by 25 O. J. EUR. COMM. (No. C 36) 3 (1982), 27 O.J. EUR. COMM. (No. C 51) 8 (1984), 31 O.J. EUR. COMM. (No. C 130) 4 (1988), and 32 O.J. EUR. COMM. (No. C 22) 14 (1989).

44 _{See Cases 142 & 156/84, BAT and RJ Reynolds v. Commission; Case 6/72 – Europemballage}

Corporation and Continental Can v. Commission; Case 27/6, United Brands Co. & United Brands Continental B.V. v. Commission; Case 85/76 – Hoffmann-La Roche & Co. v. Commission and Case 127/73 – BRT v. SABAM.

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calculations.”45 Indeed, the Commission itself has also confirmed that “when the Regulation was adopted, it was generally understood that the level of the turnover thresholds had been set by way of political compromise”46 and thus that “they do not necessarily reflect the importance of the merging companies’ activities on the specific markets affected.”47

Accordingly, the Commission has been trying to lower these thresholds with each revision. In the first revision of the EUMR48_{, the Commission could not succeed in lowering the high} turnover thresholds set in 1989. That said, the Commission was successful in introducing alternative turnover thresholds, which makes it possible to bring a transaction under the Commission’s jurisdiction “based on lower thresholds achieved in a wider set of Member States.”49 However, as stated by the Commission itself, the introduction of these lower alternative thresholds did not give rise to an increase in the number of transactions that were reviewed by the Commission50_{, and also, the Commission has acknowledged that there was,} indeed, need for further improvement.51

The currently applicable merger control regulation in the EU, Regulation No. 139/2004, embodies both the initially set high turnover thresholds and the lower alternative turnover thresholds that were introduced later on. The framework of the currently applicable merger control thresholds is contained under Article 1, which provides that:

“1. Without prejudice to Article 4(5) and Article 22, this Regulation shall apply to all concentrations with a Community dimension as defined in this Article.

2. A concentration has a Community dimension where:

(a) the combined aggregate worldwide turnover of all the undertakings concerned is more than EUR 5000 million; and

46

European Commission, Community Merger Control Green Paper on the Review of the Merger Regulation (1996, OOPEC, Luxembourg), para. 32.

dimension thresholds in the light of economics and experience in merger control”, European Law Review 1996, 21 Supp. (Competition law survey 1996), CC89-114, p. 9. Also see: European Commission, Report on the Review of the Merger Regulation, [1995], p.8.

48_{The first revision took place between the years 1996 and 1997.} 49

D. Chalmers, G. Davies, & G. Monti, “European Union Law: Cases and Materials”, Cambridge University Press, [2010], Chapter 24.

50

D. Chalmers, G. Davies, & G. Monti, “European Union Law: Cases and Materials”, Cambridge University Press, [2010], Chapter 24. Also see: European Commission, “Report to the Council on the Application of the Merger Control Thresholds”, COM (2000) 399 final; “Green Paper on the Review of Council Regulation 4064/89”, COM (2001) 745/6 final, point 24.

51 _{D. Chalmers, G. Davies, & G. Monti, “European Union Law: Cases and Materials”, Cambridge}

University Press, [2010], Chapter 24. Also see: European Commission, “Report on the Functioning of Regulation No. 139/2004”, COM (2009) 281 final, para. 23.

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(b) the aggregate Community-wide turnover of each of at least two of the undertakings concerned is more than EUR 250 million,

unless each of the undertakings concerned achieves more than two-thirds of its aggregate Community-wide turnover within one and the same Member State.

3. A concentration that does not meet the thresholds laid down in paragraph 2 has a Community dimension where:

(a) the combined aggregate worldwide turnover of all the undertakings concerned is more than EUR 2500 million;

(b) in each of at least three Member States, the combined aggregate turnover of all the undertakings concerned is more than EUR 100 million;

(c) in each of at least three Member States included for the purpose of point (b), the aggregate turnover of each of at least two of the undertakings concerned is more than EUR 25 million; and

(d) the aggregate Community-wide turnover of each of at least two of the undertakings concerned is more than EUR 100 million,

unless each of the undertakings concerned achieves more than two-thirds of its aggregate Community-wide turnover within one and the same Member State.

4. On the basis of statistical data that may be regularly provided by the Member States, the Commission shall report to the Council on the operation of the thresholds and criteria set out in paragraphs 2 and 3 by 1 July 2009 and may present proposals pursuant to paragraph 5. 5. Following the report referred to in paragraph 4 and on a proposal from the Commission, the Council, acting by a qualified majority, may revise the thresholds and criteria mentioned in paragraph 3.”52

As it is evident from the currently applicable merger control thresholds provided above, the Commission has intentionally made the decision to maintain the turnover based thresholds in merger control, without introducing any new alternative criteria. This approach can also be seen in the preamble of the currently applicable EUMR, which states that “the scope of application of this Regulation should be defined according to the geographical area of activity of the undertakings concerned and be limited by quantitative thresholds in order to cover those concentrations which have a Community dimension.”53 Indeed, the Report from the Commission to the Council on the application of the Merger Regulation thresholds, which contains an evaluation of the currently applicable thresholds, clearly states that the reason for having “mechanical turnover thresholds” is “to divide competence between the Commission and the NCAs.”54 In other words, “turnover thresholds are used in order to provide a relatively

52

Article 1 of Council Regulation (EC) No. 139/2004 of 20 January 2004 on the control of concentrations between undertakings (the EC Merger Control Regulation), OJ L24, 29.01.2004.

53_{Recital 9 of the preamble of Council Regulation (EC) No. 139/2004 of 20 January 2004 on the control}

of concentrations between undertakings (the EC Merger Control Regulation), OJ L24, 29.01.2004.

54 _{Paragraph 17 of Report from the Commission to the Council on the application of the Merger}

Regulation thresholds, COM (2000) 399 final – 28.06.2000. Available at: https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:52000DC0399&from=EN.

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simple and objective mechanism for determining the allocation of jurisdiction”55 which proves that they are not the appropriate means “to act as a way of predicting the market power of the undertakings concerned.”56

While the reason for establishing merger control thresholds based solely on turnover within the initial EUMR was to provide a clear-cut solution to address the jurisdictional concerns of the Member States57_{; there is no justification as to why the Commission still conservatively seeks} to approach mergers solely from a quantitative perspective, where it is clear that there is an increasing need to introduce supplementary qualitative criteria that are better tailored to weight the Community dimension of technology transactions from a substantial point of view. It is clear that, the Commission is still relying on the same rationale which was intended for addressing the concerns that were present at the time of the adoption of the initial EUMR. The Commission needs to break out of the ‘limiting’ purpose of the adoption turnover based thresholds, and should rather adopt a more over-reaching approach by introducing alternative thresholds, especially in terms of technology markets – where turnover is not indicative of competitive strength – in order to be able to correctly detect the transactions that are likely to produce anti-competitive effects on the internal market and consumers. The Commission seems to still perceive merger control as a jurisdictional issue, where it should come to the realization that it is a very significant and effective tool in the efficient policing of the markets, which requires the Commission to take a look at the greater picture, rather than to limit itself.

All in all, the background leading to the adoption of the first EUMR suggests that merger control in the EU has been one of the most politicized areas, which has resulted in the adoption of high turnover based merger control thresholds, since the initial rationale behind the adoption of turnover based thresholds was to limit and clearly determine the scope of the transactions to fall under the Commission’s jurisdiction. As can be seen from the relevant provisions of the currently applicable EUMR and its preamble, the use of turnover based thresholds is still perceived and used as a tool to limit those transactions that are to be brought under the Commission’s scrutiny. However, considering the needs of the unique nature of the technology markets and the fact that each year the number of technology transactions is rapidly increasingly; the Commission needs to adopt alternative qualitative merger control threshold criteria to be in a position to truly predict the potential anti-competitive outcomes of technology transactions, which are not suitable to be thoroughly assessed solely based on the turnover figures of the transaction parties.

55

R. Whish & D. Bailey, “Competition Law”, Oxford University Press, Eighth Edition, p. 883.

56_{R. Whish & D. Bailey, “Competition Law”, Oxford University Press, Eighth Edition, p. 883.}

57_{D. Chalmers, G. Davies, & G. Monti, “European Union Law: Cases and Materials”, Cambridge}

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Chapter 3 – Inadequacy of the existing EU merger control threshold criteria in technology markets and the need for adjustment thereof:

The notification thresholds set out under Article 1(2) and 1(3) of the EUMR automatically exclude from the Community’s jurisdiction the transactions involving two parties where one of the transaction parties does not generate EUR 100 million in the European Union.58 This means that, transactions concerning products which “are offered to consumers for free or quasi-free will typically fall outside the Commission’s jurisdiction, unless the parties generate turnover in other ways so as to meet the EU merger control thresholds.”59 Accordingly, in such cases, unless the transaction parties are active in two-sided markets (where they are able to generate turnover from their free services by way of advertising) or, are operating in other markets (where they are performing other additional activities that are suitable for generating revenue), the EU merger control thresholds are unlikely to be met.60_{Moreover, considering that the} transactions taking place in technology markets “involve one or more companies that only offer free or quasi-free services, generating little or no revenues”61, such transactions are especially under the risk of not being caught by turnover thresholds, which are currently the only notification threshold criterion stipulated under the EUMR.

The insufficiency of the current EUMR notification thresholds, which are solely based on turnover, were acknowledged by the Council and the Commission in the past, where they have declared that “they would be ready to consider taking other factors into account in addition to turnover when the thresholds were revised.”62_{In this respect, Article 1 of the EUMR, which} provides for the notification criteria, also includes provisions regarding the revision of the criteria under paragraphs 4 and 5. However, ever since its establishment in 1989, the revisions concerning the merger control thresholds have only led to the introduction of an alternative threshold, again based on turnover, and have not introduced anything new with respect to the criteria to be taken into consideration. On one hand, while it can be suggested that the use of thresholds based on turnover provide the undertakings and the regulators with administrative ease regarding the determination of jurisdiction63; on the other hand, it is also necessary to make

58

E. Ocello, C. Sjödin, A. Subočs, “What’s Up with Merger Control in the Digital Sector? Lessons from the Facebook/WhatsApp EU merger case”, Competition Merger Brief, Issue 1/2015 – February, European Union Publications.

59_{E. Ocello, C. Sjödin, A. Subočs, “What’s Up with Merger Control in the Digital Sector? Lessons from}

the Facebook/WhatsApp EU merger case”, Competition Merger Brief, Issue 1/2015 – February, European Union Publications.

61

62 _{European Commission, Community Merger Control Green Paper on the Review of the Merger}

Regulation (1996, OOPEC, Luxembourg), para. 32.

63_{D. Chalmers, G. Davies, & G. Monti, “European Union Law: Cases and Materials”, Cambridge}

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sure that the criteria to be used in terms of thresholds are substantially sufficient to distinguish the transactions that have a Community-dimension.

This insufficiency in merger control thresholds, which still exists today, was also recently acknowledged by Margrethe Vestager, the European Commissioner for Competition, in April 2016, who identified the need for new thresholds with the following words:

“Our rules decide which mergers need to be notified to us based on the turnover of the

companies involved. So, when someone buys up an innovator, with a lot of good ideas but not yet much in the way of sales, we might not even have the chance to look at whether that merger will be bad for innovation. That’s why I announced last month that we’re looking at whether to change the thresholds for notification, to make sure we get a look at this type of merger.”64

Accordingly, the European Commission has placed “the Consultation on Evaluation of Procedural and Jurisdictional Aspects of EU Merger Control” for the period between October 2016 and January 2017. The importance of this consultation request is that, unlike the 2014 White Paper, it included new issues such as “the effectiveness of the turnover based jurisdictional thresholds of the EU Merger Regulation.”65 The reason for particularly including this new issue in the consultation was provided as:

“A debate has recently emerged on the effectiveness of these purely turnover-based

jurisdictional thresholds, specifically on whether they allow to capture all transactions which can potentially have an impact in the internal market. This may be particularly significant in certain sectors, such as the digital and pharmaceutical industries, where the acquired company, while having generated little turnover as yet, may play a competitive role, hold commercially valuable data, or have a considerable market potential for other reasons.”66

As indicated by Margrethe Vestager, the insufficiency of the current EUMR thresholds in technology deals have become more visible in practice with the high-profile transactions between technology companies that took place within the last couple of years. The most recent and notable case that has raised concerns with respect to the insufficiency of the current merger control thresholds was WhatsApp’s acquisition by Facebook67, which has also raised questions as to the future of the efficiency of the referral system: a safeguarding mechanism introduced in the early 2000s, as a result of yet another unsuccessful attempt at lowering the turnover thresholds, allowing for the Commission to review certain transactions that do not fulfill the

64 _{Margrethe Vestager “Competition: the mother of invention”, European Competition and Consumer}

Day, Amsterdam, The Netherlands, April 18, 2016, available at:

https://ec.europa.eu/commission/commissioners/2014-2019/vestager/announcements/competition-mother-invention_en.

65

Consultation on Evaluation of procedural and jurisdictional aspects of EU merger control,

http://ec.europa.eu/competition/consultations/2016_merger_control/index_en.html, [website], accessed on 25.05.2018.

66 _{Consultation on Evaluation of procedural and jurisdictional aspects of EU merger control,} http://ec.europa.eu/competition/consultations/2016_merger_control/index_en.html, [website], accessed on 25.05.2018.

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turnover thresholds, provided that they satisfy certain requirements.68 Even though the main purpose of introducing a safeguarding mechanism was to eliminate the insufficiencies arising from the turnover based thresholds, this mechanism have also proved to be insufficient in terms of capturing the transactions in technology markets. Particularly in 2009, and from 2013, the Commission has worked on identifying the areas in merger control that needs improvement. Accordingly, in 2014, the Commission has published the White Paper titled “Towards More Effective EU Merger Control”, however this White Paper did not contain any findings with respect to the turnover thresholds, but included improvements with regards to simplifying the referral procedures, in an effort to make the system more effective.69

The need to introduce alternative merger control threshold criteria gains more significance as a number of recent technology transactions70 have showed to prove that the safeguarding mechanism – intended for capturing the transactions that have a Community dimension, but lack the turnover – is not always a sufficient corrective mechanism. To clarify, Article 4 of the EUMR, titled “Prior notification of concentrations and pre-notification referral at the request of the notifying parties” sets out the framework for the referral procedure, which is incrementally being used with respect to the high-profile transactions that take place in the technology sector. Sub-paragraph 5 of the aforementioned Article provides for the situations in which a transaction that does not fulfill the turnover based Community dimension thresholds can be referred to the European Commission for review, and stipulates that:

“5. With regard to a concentration as defined in Article 3 which does not have a Community

dimension within the meaning of Article 1 and which is capable of being reviewed under the national competition laws of at least three Member States, the persons or undertakings referred to in paragraph 2 may, before any notification to the competent authorities, inform the Commission by means of a reasoned submission that the concentration should be examined by the Commission.

The Commission shall transmit this submission to all Member States without delay.

Any Member State competent to examine the concentration under its national competition law may, within 15 working days of receiving the reasoned submission, express its disagreement as regards the request to refer the case.

Where at least one such Member State has expressed its disagreement in accordance with the third subparagraph within the period of 15 working days, the case shall not be referred. The Commission shall, without delay, inform all Member States and the persons or undertakings concerned of any such expression of disagreement.

Where no Member State has expressed its disagreement in accordance with the third subparagraph within the period of 15 working days, the concentration shall be deemed to have

68

D. Chalmers, G. Davies, & G. Monti, “European Union Law: Cases and Materials”, Cambridge University Press, [2010], Chapter 24.

69 _{European Commission, “White Paper: Towards more effective EU merger control”, COM (2014)}

0449 final, paras. 59-64.

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a Community dimension and shall be notified to the Commission in accordance with paragraphs 1 and 2. In such situations, no Member State shall apply its national competition law to the concentration.”71

The EUMR includes safeguarding provisions, such as Article 4(5) and Article 22, which are intended for the referral of concentrations not having a Community dimension (based on turnover thresholds) by Member States to the Commission. This intention is also included under recital 11 of the preamble of the EUMR, where the procedures concerning the referral of concentrations are denoted as “an effective corrective mechanism in the light of the principle of subsidiarity”72. By way of the one-stop-shop review afforded by Article 4(5) of the EUMR, the Commission was able to ultimately review a number of transactions which have not met the turnover criteria through pre-notification referral requests, in cases such as Facebook/WhatsApp73_{, Google/DoubleClick}74_{and most recently, Apple/Shazam}75_{. That said,} as provided above, the effective application of this ‘corrective mechanism’ is dependent on the fulfillment of a number of criteria: “the national merger requirements of at least three Member States being met, the merging parties taking the initiative to request a referral and the agreement of the relevant Member States”.76 Consequently, as a result of being dependent upon the fulfillment of certain requirements, there have also been examples of transactions in technology markets77 which did not meet the turnover thresholds and were also not referred to the Commission for review.78

Moreover, in addition to the abovementioned concerns with respect to the effective application of the pre-notification referral mechanism, there is also an additional concern that is likely to arise in consequence of Brexit. As provided above, one of the requirements for the ‘corrective mechanism’ to apply in terms of the transactions that are unable to meet the Community dimension thresholds is the national merger requirements of at least three Member States being met. Without prejudice to those transactions in technology markets that have successfully satisfied the requirement of ‘the national merger requirements of at least three Member States

71

Article 4(5) of Council Regulation (EC) No. 139/2004 of 20 January 2004 on the control of concentrations between undertakings (the EC Merger Control Regulation), OJ L24, 29.01.2004.

72 _{Recital 11 of the preamble of Council Regulation (EC) No. 139/2004 of 20 January 2004 on the}

control of concentrations between undertakings (the EC Merger Control Regulation), OJ L24, 29.01.2004, 1-22.

73

Case M.7217 – Facebook/ WhatsApp.

74_{Case M.4731 – Google/DoubleClick.}

75_{Case M.8788 – Apple/Shazam. Press release available at:} http://europa.eu/rapid/press-release_IP-18-664_en.htm.

76

77_{E.g. Facebook’s acquisition of Instagram, Google’s acquisition of Waze.}

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being met’, without including the UK79; following the implementation of Brexit, the number of transactions referred to the Commission is expected to decrease due to the fact that a transaction which fulfills the notification requirements in the UK will no longer be counted among the Member States where a notification requirement was satisfied, and accordingly, this will result in an increase of the transactions that will escape the Commission’s review. Indeed, the distribution of merger and acquisition activities among the Member States between the years 1991 and 2004 shows that the United Kingdom is in the first place with 31.2%, followed by Germany and France, with 16.5% and 13.1% share respectively.80 Although it is currently unknown how Brexit will affect the currently applicable merger control regime in place, in the event that the UK decides to have its own merger control notification regime separate from the EU81, it is highly likely that this situation will have a negative impact on the fulfillment of the requirements for the effective application of the referral mechanism.

The concerns regarding the insufficiencies of turnover based merger control thresholds, as well as the safeguarding mechanisms intended to eliminate these deficits, also raises the question with respect to the appropriateness of using turnover based thresholds in pursuing the main aim of EU merger control regime. The purpose of EUMR is to sustain a thriving internal market by ensuring that reorganizations in the market will not stifle competition82. This is especially important in terms of the technology markets considering that the preservation of competitive structure of the market is under the risk of being distorted by foreclosure effects, both on the market and the consumers. The current state of the turnover criteria brings the main goal of EU merger control into jeopardy, considering that the technology transactions which are unable to satisfy the thresholds and the requirements under the referral procedure escape the Commission’s scrutiny.

Moreover, in order to achieve the main goal of European competition policy, the transactions that are likely to have an impact on consumers, and especially the transactions that concern the products that are commonly and widely used by consumers in their day-to-day lives, should be able to be easily and clearly identified by the European Commission for examination.

For instance, Facebook, Inc. owns Facebook, WhatsApp and Instagram, which are three of the five platforms that have reached to 100 million users the fastest.83 A report from December 2016 suggests that people spend an average of thirty-five minutes a day on Facebook, and an

79 _{E.g. most recently, see the acquisition of Shazam by Apple. Press release available at:} http://europa.eu/rapid/press-release_IP-18-3505_en.htm.

80_{Fabienne Ilzkovitz & Roderick Meiklejohn, “European Merger Control, Do We Need an Efficiency}

Defence?”, [2006], Edward Elgar Publishing Limited, pp. 12.

81

A view from the CMA: Brexit and beyond, https://www.gov.uk/government/speeches/a-view-from-the-cma-brexit-and-beyond, [website], accessed on 06.06.2018.

82_{Recitals 2 and 3 of the preamble of Council Regulation (EC) No. 139/2004 of 20 January 2004 on the}

control of concentrations between undertakings (the EC Merger Control Regulation), OJ L24, 29.01.2004, 1-22.

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additional fifteen minutes a day on Instagram, which has been acquired by Facebook84. The amount of time people spends on these platforms per day (i.e. a total of 50 minutes a day – excluding the time spent on one of the most widely used messaging applications, WhatsApp, which is also owned by Facebook, Inc.) marks the top behavior people spend time on outside of family, work or sleep.85 To put it other words, the average time users spend on Facebook and Instagram per day is “almost as much as time people spend eating and drinking (1.07 hours)”86. While the Commission has considered to include market share as an alternative to turnover in the past in its draft EUMR proposals, the structure of the contemporary technologically driven markets and the entities operating within these markets have also affected the Commission’s approach to market shares in its recent decisions.

Most recently, in its Facebook/WhatsApp87_{decision, the Commission started its review} regarding the market shares of the transaction parties by stating that according to the Horizontal Merger Guidelines, market shares and concentration levels provide useful first indications of the market structure and of the competitive importance of both the merging parties and their competitors.88_{However, within the same decision, the Commission continues its review by} acknowledging the unique nature of the markets which the transaction parties are active in, and consequently, adopts a tailor-made approach with respect to market shares with the following words:

“Even if the data provided by the Parties were to underestimate the Parties’ combined market

shares, the Commission notes that the consumer communications sector is a recent and fast-growing sector which is characterized by frequent market entry and short innovation cycles in which large market shares may turn out to be ephemeral. In such a dynamic context, the Commission takes the view that in this market high market shares are not necessarily indicative of market power and, therefore, of lasting damage to competition.”89

84

Scott Galloway, “The Four: The Hidden DNA of Amazon, Apple, Facebook and Google” [2017], Bantam Press, p. 96. Also see: Mediakix, “How Much Time Do People Spend on Social Media?”, 15 December 2016, available at: http://mediakix.com/2016/12/how-much-time-is-spent-on-social-media-lifetime/#gs.GM2awic.FfKfDcw.

Bantam Press, p. 96. Also see: James B. Stewart, “Facebook Has 50 Minutes of Your Time Each Day.

It Wants More”, New York Times, 5 May 2016, available at:

https://www.nytimes.com/2016/05/06/business/facebook-bends-the-rules-of-audience-engagement-to-its-advantage.html.

86

James B. Stewart, “Facebook Has 50 Minutes of Your Time Each Day. It Wants More”, New York Times, 5 May 2016, available at: https://www.nytimes.com/2016/05/06/business/facebook-bends-the-rules-of-audience-engagement-to-its-advantage.html.

87

Case M.7217 - Facebook/ WhatsApp.

88 _{Guidelines on the assessment of horizontal mergers under the Council Regulation on the control of}

concentrations between undertakings ('Horizontal Merger Guidelines'), OJ C 31, 5.2.2004, p. 5, paragraph 14.

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This reformist approach of the Commission towards the interpretation of high market shares in recent and fast-growing sectors was already adopted by the Commission in Microsoft/Skype90_, three years prior to the Facebook/WhatsApp decision, and was recognized by the General Court in Cisco Systems Inc. v Commission91, which concerned the request for the annulment of the Commission decision granting clearance to the acquisition of Skype by Microsoft92. With respect to the market shares of the parties to the transaction, the General Court has confirmed the Commission’s approach using the exact same wording quoted above.93

Considering the evolving approach of the Commission regarding the interpretation of high market shares in rapidly evolving markets, it can be argued that the market shares submitted within the Form CO for notification purposes are not likely to be evaluated within a restrictive and traditional sense. In this respect, noting that the thresholds to be applied for notification purposes should contain and reflect elements of actual assessment in order to form a consistent and systematic approach to the evaluation criteria of mergers, it can be concluded that much progressive criteria than market share should be introduced.

In light of the considerations above, the European Commission has issued “the Consultation on Evaluation of Procedural and Jurisdictional Aspects of EU Merger Control”94 for the period between October 2016 and January 2017, which included for the first time the issue of the ‘effectiveness of the purely turnover-based jurisdictional thresholds of the EU Merger Regulation’. In its Evaluation Roadmap95 the Commission has specifically stated that the purpose of including this issue was especially with respect to the transactions concerning the digital economy, where “relevant business models may involve the formation of commercially valuable data inventories without generating corresponding turnover.”96

As explained in detail above and as highlighted by the issues raised with respect to the recent high-profile cases; transactions that concern parties with low turnovers are unlikely to be brought under the Commission’s scrutiny even in cases where the target “already plays a competitive role, holds commercially valuable data, or has a considerable market potential for

90

Case M.6281 – Microsoft/ Skype.

91

Case T-79/12 – Cisco Systems Inc. v Commission.

92_{Case M.6281 – Microsoft/Skype.}

93_{Case T-79/12 – Cisco Systems Inc. v Commission [2013], paragraph 69.} 94

Consultation on Evaluation of procedural and jurisdictional aspects of EU merger control,

http://ec.europa.eu/competition/consultations/2016_merger_control/index_en.html, [website], accessed on 06.06.2018.

95_{DG COMP, Evaluation Roadmap, “Evaluation of Procedural and Jurisdictional Aspects of EU Merger}

Control”, 3 August 2016, available at:

http://ec.europa.eu/smart-regulation/roadmaps/docs/2017_comp_003_evaluation.pdf.

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other reasons”97, due to the insufficiency of the merger control threshold criteria and the various requirements foreseen for the application of the referral procedure. In order to correctly determine the transactions in technology markets that are likely to have a Community-dimension and raise competition law concerns, there is an urgent need to introduce more market structure oriented and appropriate merger control criteria, which has also been acknowledged by the Commission through its Consultation on Evaluation of Procedural and Jurisdictional Aspects of EU Merger Control.