One Ring to Rule Them All?

By: Georg Schmittmann (D’Kart)

In the epic fantasy novel “Lord of the Rings“, the evil Lord Sauron secretly forged the “One Ring”. His intentions were pretty clear. He wanted an all-powerful magic ring. “One Ring to Rule them all, One Ring to find them”, J. R. R. Tolkien wrote. Not to compare the European Commission with the evil Lord Sauron, but it does seem that the Commission may have found One Ring to rule over all mergers and transactions, to find them all. And while Art. 22 is not new but kept in hiding in plain sight over years, it is now rising from the depths of Mordor the Merger Control Regulation.

But enough of the prosaic references…

The “Dutch Clause” – Art. 22

Art. 22 allows an “upward” referral of transactions that initially do not fall in the jurisdiction of the Commission. Member States can request the Commission to review a transaction, if the transaction affects trade between Member States and threatens to significantly affect competition within the territory of the Member State.

Its key element, however, is that a referral request based on Art. 22 does not require the referring Member State to have national jurisdiction over a transaction. This at first surprising feature was necessary as, when Art. 22 was introduced, a number of Member States (including The Netherlands – therefore the “Dutch Clause”) did not have a national merger control regime and consequently had no national jurisdiction over transactions. Therefore, it was thought to be sensible to open the door for referrals to Brussels even for cases which do not fall under national jurisdiction such that Member States without a merger control regime of their own could refer important cases. This is why even before the recent Commission’s guidance – technically – a referral request was possible, even if a transaction did not meet the national merger control thresholds.

The clause has not been used much. For years, the Commission did not accept Art. 22 referrals if the Member State did not have jurisdiction. This is to some extent also reflected in the ECN principles on the application of Member States of Art. 4(5) and Art. 22 – not one word in this document suggests that a referral without national jurisdiction is possible…

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