COMPETITION • EUROPEAN LAW • MERGERS
A concentration is deemed to arise where a change of control results from the merger of two or more undertakings or parts of undertakings. Article 3(1) of the regulation includes all merger transactions within its scope of application, i.e. merger by absorption, merger by creation of a new company or de facto merger. The text no longer includes, as the 1989 regulation did, a provision that the merger must take place between two previously independent undertakings and therefore no longer excludes, at least in theory, intra-group mergers from its scope of application.
1) Merger by absorption
A merger may result from the absorption of one undertaking by another, the latter retaining its legal identity while the absorbed undertaking ceases to exist as an independent legal entity. A merger by absorption resulting in the creation of a new entity constitutes a concentration. By contrast, a transaction by which the target undertaking merged with the subsidiary of the purchasing undertaking and was therefore controlled by the latter, does not constitute a merger but an acquisition of control within the meaning of Article 3(1)(b) of Regulation No 139/2004.
2) Merger by creation of a new entity
The merger takes place when two or more undertakings come together to create a new undertaking and disappear as separate legal entities.
The Regulation applies to cases of de-mergers or divisions of joint ventures even if the division transaction was imposed by law.
4) De facto merger
Even if it does not fulfill the required legal conditions, a transaction may be classified as a merger where it leads to the same economic result. Thus, even without constituting a merger in the legal sense, the combining of the activities of previously independent undertakings, which results in the creation of a single economic unit, is considered to be a concentration. The existence of a single, permanent economic management of independent entities may lead to a finding of a de facto merger.