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Timothy Cowen, Oct 15, 2014
Whether a broader public interest test should apply to merger control has recently been discussed by Alex Chisholm, CEO of the U.K. Competition and Markets Authority, after being raised at Prime Minister’s questions during Pfizer’s attempt to acquire Astra Zeneca. Similar issues also arose this year in France regarding General Electric’s bid for Alstom. They are not isolated incidents and follow cases in many other jurisdictions that have come up over the years. They remind us that merger control by competition authorities is not the only source of control over mergers, and that public policy issues on mergers, and grounds other than competition grounds, do not go away.
At the outset it is important to note that EU merger control is currently designed to investigate and assess competition issues. The legal tests against which the mergers are judged are based on competition law concepts such as whether the proposed merger would strengthen dominance in a relevant market or significantly impede effective competition. The people who administer the system, and those who work for merging parties, complainants, and others affected by mergers, have developed considerable expertise in the law and economics used to assess and determine whether a merger meets these tests. As a one-stop shop, the Commission only has exclusive jurisdiction to decide on competition grounds. Non-economic public interests are carved out and have no place in the substantive tests. However, other public interests do arise and there is a process, addressed in Article 21 of the Merger Regulation, for Member States to take “appropriate measures” to protect other “legitimate interests.”
Article 21 refers to legitimate interests and lists a few. What may be a public interest that is legitimate is not a closed list, and is subject to Commission assessment. Legitimate public interests can be notified in advance and can be added to over time.
This system means that national controls over media plurality, defense, or other legitimate public interests continue to exist at national levels. Such issues are addressed by national officials under separate national regimes (such as the recent News Corp/Sky merger in the United Kingdom).
Wider public interest issues do continue to arise, posing a question about greater coordination being needed on their assessment and determination. This article briefly reviews some of the cases and issues that have been, or are being, raised. It accepts that the current system of merger control is ill suited to considering a wider public interest investigation or adjudication and that a wide public interest test is undesirable. However, a case can be made for a more coordinated EU system of parallel oversight, similar to that which operates in the United States, to consider other non-competition related public interests on investment within a merger control timetable. The current debate is outlined below, followed by a modest suggestion of how the system could be reformed for the future, which might form the basis for a discussion of the mechanism.