Transcript Break-out session on Merger remedies

BREAK-OUT SESSION ON MERGER REMEDIES
CHALLENGES IN DESIGNING AND IMPLEMENTING CROSSBORDER REMEDIES: LESSONS LEARNED
ICN ANNUAL CONFERENCE
Sydney, 28 April 2015
Kyriakos Fountoukakos, Partner, Herbert Smith Freehills, Brussels
GLOBAL PROLIFERATION OF MERGER CONTROL REGIMES
The last decade has seen a worldwide “boom” in the adoption of (largely
mandatory and suspensory) merger control regimes
2013-2014
COUNTRIES WITH MERGER CONTROL REGIMES
2012
Brazil*
Bangladesh
Ecuador
COMESA
Georgia
Paraguay
UAE
100+
2008
China
Saudi Arabia
Qatar
2000-2005
Albania
Egypt
Jordan
Morocco
Namibia
Ukraine
Vietnam
2009 - 2010
2007
2006
<70
Russia*
Colombia*
Indonesia
Kuwait
Mauritius
2011
India
Kenya
Gambia
Pakistan
Singapore
Uruguay
2000
2014
* Significant changes to existing law rather than introduction of merger control regime
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COMPETITION AUTHORITIES COOPERATE
The EU has 10 competition cooperation agreements in place
60% of complex EU merger cases required close cooperation, including on
remedies (Margrethe Vestager)
EU-Russia
(2011)
EU-Canada
(1999)
EU-Switzerland
(2014)
EU-Japan
(2003)
EU-USA
(1995,1998 &
2011)
EU-Bosnia
H. (2008)
EU-India
EU-Korea (2009)
EU-China
(2013)
(2012)
EU-Brazil
(2009)
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ISSUES IN DESIGNING INTERNATIONAL MERGER REMEDIES
• Time is of the essence
– But merger control review process may be at very different stages
in each relevant jurisdiction
• Need to coordinate, but may prove difficult in practice
• Practical to have one remedies template for all jurisdictions
– Tempting to opt for the lowest thresholds
– Does it work in practice?
• International remedies and local remedies
– Risk of conflict
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INTERNATIONAL MERGER REMEDIES: PRACTICAL EXAMPLES
• Panasonic/Sanyo (2009)
– Competition concerns on the markets for different types of batteries
– Different remedies required by the JFTC, the EU Commission, the FTC and
MOFCOM
•
JFTC: divestiture of Sanyo’s manufacturing facilities in Japan to a third party battery
manufacturer
•
FTC: upfront buyer for Sanyo’s portable rechargeable NiMH business. Main asset
was a plant in Japan
•
EU Commission and MOFCOM: either Panasonic or Sanyo divests one of its
relevant businesses. Assets were in China and Japan
– Divestitures required outside the authorities’ respective jurisdictions
– Despite cooperation, each authority followed its own approach
– Timing: decisions issued close to one another (between September and
November 2009)
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INTERNATIONAL MERGER REMEDIES: PRACTICAL EXAMPLES
• Microsoft/Nokia (2013/2014)
– Reviewed in 16 jurisdictions
– Concern raised by competitors and licensees regarding the conduct of the
entity post-transaction as Nokia would retain ownership of its patents (including
SEPs)
– Cleared unconditionally in the EU (concern remedies would be outside the
scope of the EUMR), the US and in 13 other jurisdictions
– MOFCOM opened a Phase II investigation and imposed behavioural remedies
•
Both Microsoft and Nokia made commitments regarding their SEPs and non-SEPs
•
Aim: prevent Nokia from
manufacturers
using its
patents
against
Chinese
smartphone
– Significant impact on timing: MOFCOM’s Phase II review lasted 7 months
•
Transaction prevented from closing internationally despite clearance in 15
jurisdictions
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INTERNATIONAL MERGER REMEDIES: PRACTICAL EXAMPLES
• Oracle/Sun Microsystems (January 2010) v Cisco/Tandberg (April
2010)
– Oracle/Sun Microsystems:
•
Transaction cleared unconditionally by the DoJ
•
EU Commission opened a Phase II investigation. No formal remedies but “pledges”
were taken into account
•
Independence of approach followed by the EU Commission, criticised by the DoJ
– Cisco/Tandberg:
•
EU clearance conditional on the divestiture by Cisco of a protocol for its video call
solutions
•
Aim: ensure interoperability with competitors’ products
•
US unconditional clearance, inter alia thanks to the remedy imposed by the EU
Commission
– Cisco/Tandberg described as “model international cooperation” by the DoJ
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