2 Jurisdiction Structure Of Eu Meger Control Notes

2 - Jurisdiction Mind Map Introduction Concept of Concentration (1) Meaning of "Merger & concentration" (2) Horizontal, vertical, Concentration Concept: conglomerate merger (1) The legislative definition is (3) Merger activity set out in EUMR (2) -Art 3(1)-(3): concentration Why do firm merge? practice is explained in (1) Economic of scale/scope: commission consolidated -product -specific - jurisdictional notice. produce more to be able to (3) EUMR: Question: whether produce cheaper one undertaking acquires -plant- specific -use multi control (equates to decisive product plant to produce influence) on lasting basis products faster over another business - firm- specific - overall entity. costs (2) Cheaper to take over Business activity? distributor than distribution (1) -EUMR: assets must network. Merge with a firm constitute a business to is able to do research & which a turnover can be development/with clearly attributed management skills (2) Jurisdictional choice - (3) Notional champion - concentration: encourage domestic firms ? A business' client base to compete with ? Intangible assets (IP international market rights) (4) Threat of successful takeover bid ensure Acquisition of Control existing management's (1) Control of strategic issues Structure of EU Merger Control Full Merger Joint Ventures Sole Control? (1) 2/more independent undertaking amalgamate into a new undertaking and ease to exist as separate legal entities (2) Can decide commercial policy (de facto) (3) Can veto commercial policy (de jure) (4) Acquirer obtain >50% voting rights in target/rights enable to exercise decisive influence (nominate majority Board) (5) 50% voting right/target's board veto right over strategic issue Introduction (1) Will impact commercial arrangements (2) Dilemma: merger/cartel? (3) Question: Whether JV performs on a lasting basis at all function of all autonomous economic entity (Art 3(4)) (4) If yes, concentration -> satisfied threshold (Art 101 will not apply) (5) If no, not concentration, Art 101 may apply. (6) It is a JV if ? -2/more parties gain the jointcontrol over venture ? -All functions of autonomous entity ? -Lasting basis Control is NOT acquired by minority participation rights if no veto rights in: ? Changes in target's structure; ? Increase/decrease in Joint Control under EUMR (1) Question: whether an undertaking ("U") has veto right over -essential strategic decisions concerning the target (2) Analysis - ? strategic issues 1 performance - market of (not day-to0day capital; ? Decisive influence corporate control management issues) ? Sale/liquidation of ? Other factors - specific (5) Prevent erection of barrier (2) Decisive influence : control target market (choice of technology to enter & expansion to over some/all target's and new product licence) prevent new firm from undertakingsControl in minority stake - (3) Control - competition on market. ? Business plan must be able exercise ? De jure - veto right (6) Greed of decisive influence. ? Budget ? De facto - equal voting right + individual/company, fear to ? Senior management equal representative on board be left behind in the ? Major investment process of industry Full Function Entity consolidation (1) A JV will be full-function if it (7) Increase market power - performs the functions usually restrict output & increase carried out by an undertaking price. operating on the same market in which the joint venture operates. Purpose of Merger Control (2) To be full function entity, a JV (1) Maintain process of must: competition in market ? No need to enjoy autonomy place as regards strategic decision(2) Maximizing consumer making welfare ? JV operates a market and (3) "competition law" forbids functions are carried out by abuse of market power same market ? take activities beyond a specific decision of parent company's activity i.e. sell all products of parent company) ? Full Function - Structure and behaviour of independent enterprise on market and JV is active ? Feature: Management (dayto-day), access to sufficient resources: finance, structure, IT assets 2 

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