Will the EU Introduce Additional Criteria for Approving Company Acquisitions?

According to current regulations, the European Commission only analyzes proposed company acquisitions whose revenues exceed a certain threshold. As a result, some companies have bypassed scrutiny.

European regulators may introduce additional criteria for analyzing company acquisitions to include planned acquisitions of innovative small enterprises whose revenues do not reach the prescribed threshold for initiating such procedures.

According to current regulations, the European Commission only analyzes proposed company acquisitions whose revenues exceed a certain threshold. As a result, some companies have bypassed scrutiny, notes Reuters.

Thus, Brussels did not analyze Facebook’s $19 billion offer to acquire the innovative messaging software producer WhatsApp until regulators from some EU countries requested it two years ago.

The Commission did not automatically initiate the analysis process since WhatsApp’s revenues in 2013 were below the defined threshold.

– The value of the merger could be a good indicator of its importance, but we would need to determine the right level to encompass all mergers that require scrutiny while also ensuring that we do not make life difficult for innovative new companies, explained EU Commissioner for Competition Margrethe Vestager at a conference organized by the German association of law students Studienvereinigung Kartellrecht.

Under scrutiny is also market competition in the segment of online commerce.

Separately, Vestager announced to reporters on the sidelines of the conference that the Commission will soon publish data from a study on barriers to cross-border electronic commerce in the EU.

The study focused on the trade of electronic goods, clothing, shoes, and digital content and aimed to show whether companies attempted to restrict market competition, for example, through agreements to prevent the sale of products or services in certain countries or to sell them at higher prices.

The analysis of the collected data will be published on March 18, said the European Commissioner for Competition.

– This is the first analysis, and after that, we may consider initiating cases, she added.

A preliminary report will be published at the end of summer or the beginning of autumn, concluding in the first quarter of 2017, Vestager said.

In 2014, nearly half of consumers in the European Union purchased goods and services online, but only 15 percent bought in another EU country, due to language barriers, differing laws, and limited market competition, according to data from the European Commission.