The EEA Agreement and Merger Control: What You Need to Know
The European Economic Area (EEA) agreement is a treaty that establishes the framework for free trade between 31 European countries, including the European Union (EU). In addition to facilitating trade and investment, the agreement also establishes rules for competition and merger control.
Merger control is a key aspect of the EEA agreement, designed to prevent mergers and acquisitions between companies that would unduly concentrate market power and harm competition. The EEA agreement sets forth rules for the review and approval of mergers and acquisitions involving companies that operate within the EEA.
The EEA agreement defines a merger as the “acquisition of control by one or more undertakings over the whole or parts of one or more other undertakings.” The agreement establishes two thresholds for determining whether a merger falls under its jurisdiction: the turnover threshold and the market share threshold.
The turnover threshold requires that the combined aggregate worldwide turnover of the merging companies exceeds €100 million, and the aggregate turnover of each of at least two of the companies involved in the merger exceeds €25 million within the EEA. The market share threshold requires that the merged entity will have a combined market share of at least 25% in the EEA or a substantial part of it.
If a merger falls under the jurisdiction of the EEA agreement, the companies involved are required to notify the European Commission (EC) of their intention to merge. The EC then conducts a preliminary review to determine whether the proposed merger raises competition concerns. If the EC identifies potential issues, it may initiate a more detailed investigation.
The detailed investigation is aimed at assessing the potential impact of the merger on competition. The EC considers various factors, including market concentration, potential barriers to entry, and the competitive landscape in the affected markets. If the EC finds that the proposed merger would harm competition, it may require the companies to offer remedies, such as divestitures or licensing arrangements, to address the concerns.
Overall, the EEA agreement and its merger control provisions play a critical role in promoting fair competition and preventing monopolies in the European market. As a professional, it`s important to keep up-to-date on the latest developments in competition law and regulation, as businesses increasingly turn to digital marketing and e-commerce to expand their reach and influence. Understanding the EEA agreement and its merger control provisions can help you advise clients on how to navigate the complex regulatory landscape and avoid costly legal disputes down the road.