The Merger Control Review: Belgium
The entry into force of Book IV of the Code of Economic Law2 on 6 September 2013 introduced some fundamental changes to Belgian competition law.
One of the main innovations was the simplification of the structure of the Belgian Competition Authority (BCA). The Competition Authority's former tripartite structure was changed into a single administrative authority that investigates and decides upon competition law infringements. Within this newly created administrative body, a distinction was made between the College of Competition Prosecutors (headed by the Prosecutor-General), which holds the BCA's investigative powers, and the Competition College, which holds the Competition Authority's decision-making powers.3 The Competition College consists of two assessors (appointed in alphabetical order from the relevant (native Dutch or French-speaking) list of 20 nominated assessors) and the President of the BCA, who presides over the Competition College.4 In merger control cases, the Competition College will decide whether to authorise a concentration in regular proceedings, whereas the Prosecutor will, in the first instance, decide whether to authorise mergers filed under the simplified merger procedure.
A pre-merger notification and approval for all concentrations above the legally established thresholds is required. Concentrations must be notified to the Competition Authority where the undertakings concerned, taken together, have a total turnover in Belgium of more than €100 million, and where at least two of the undertakings concerned each have a turnover of at least €40 million in Belgium.5
In addition to Book IV of the Code of Economic Law, there are a large number of royal decrees regulating various aspects of merger control in Belgium.6 The Belgian merger control rules and case law are substantially influenced by European merger control rules and case law. The Belgian courts and Competition Authority have repeatedly stated that Belgian competition law should be interpreted in light of the European courts' jurisprudence and the decisions and guidelines of the European Commission, to which reference is often made.
Finally, on 25 April 2019, a legislative proposal was adopted to amend Belgian competition law. The two most notable changes concern the introduction of a stop-the-clock mechanism7 as well as a calculation of fines based on the worldwide annual turnover of the infringing party. The amendments came into effect on 3 June 2019.
Year in review
In 2005, the notification thresholds were substantially increased, and in 2006, a simplified procedure was formally introduced into Belgian competition law. These changes resulted in a significant decrease in the number of notifications and a substantial increase in the number of mergers filed under the simplified procedure. In 2008 and 2009, the number of concentrations further declined as a consequence of the financial and economic crisis. From 2010, the number of notifications increased again. In 2019, 30 final decisions were issued. Out of these final decisions, 22 were issued under the simplified procedure and eight under the non-simplified procedure. None of the notified concentrations required a Phase II investigation in 2019. It is expected that the proportion of merger proceedings following the simplified procedure will further increase as the BCA adopted, on 8 January 2020, new rules allowing the BCA prosecutors to use the simplified procedure for a number of additional categories of concentrations.
|Concentrations||Number of notifications||Number of final decisions||Number of non-simplified procedures|
Given that the decisions in simplified procedures are generally only a page long and only include the parties' names, the markets in which they operate and the Prosecutor's confirmation that the conditions for the simplified procedure were fulfilled, these decisions do not provide any guidance on procedural issues or substantive matters. Therefore, only the decisions taken in regular procedures or the Court of Appeal's judgments are discussed here.
INEOS Oxide Limited/RWE Generation Belgium NV
On 15 February 2019, the Competition College approved the acquisition by INEOS Oxide Limited (Ineos) of RWE Generation Belgium NV (RWE).8 Ineos owns an industrial site located in Zwijndrecht, where it produces chemical products on one hand, and sells and distributes electricity, steam, demineralised water and boiler water (the commodities) on the other. Other companies also operate in Zwijndrecht, among which is RWE, which operates a cogeneration plant called CHP Inesco for the production of electricity, steam, demineralised water and boiler water. RWE sells the commodities it produces to Ineos, which uses them for its own needs and sells the surplus to the other companies present in Zwijndrecht. Therefore, the Prosecutor focused the competitive analysis on the vertical effects of the concentration at hand. The Prosecutor identified five markets for four different commodities for competitive assessment: electricity, steam, demineralised water and boiler water: (1) the production and wholesale, (2) transport, (3) distribution, (4) retail supply and (5) ancillary services. For each of those product markets, the Prosecutor found that they were affected vertically, as RWE supplies electricity, steam, demineralised and boiler water to Ineos and the parties would hold 100 per cent of the market shares in those markets. The competitive analysis focused on potential non-coordinated effects, particularly client foreclosure (where the transaction was likely to foreclose upstream competitors by restricting their access to a sufficient customer base) and input foreclosure (where the transaction was likely to increase the costs of downstream competitors by restricting their access to an important input). The Prosecutor concluded that Ineos either would not have the capacity to foreclose, or would not have any incentive to do so. Regarding the electricity markets, it was noted that the regulatory obligations imposed on the parties by the Flemish Energy Regulator would limit their capacity to foreclose input. Therefore, the transaction would not significantly impede competition on the markets vertically linked to electricity, steam, demineralised water and boiler water. The Competition College followed the Prosecutor's analysis and declared the concentration admissible.
Kinepolis Group SA
In 2019, the Kinepolis saga continued.9 This case started over 20 years ago, when, on 17 November 1997, the BCA cleared a concentration between two cinema groups that established the Kinepolis Group. The thus-created Kinepolis would obtain a dominant position in the Belgian market, but the merger was nevertheless cleared subject to strict conditions allowing Kinepolis to internationally compete with major international cinema groups. The conditions imposed included, among other things, an obligation to obtain the BCA's prior approval for any form of growth in the Belgian market, including not only takeovers, but also organic growth, expansions, renovations and replacements resulting in a 20 per cent increase in the capacity of the affected cinema complex. Since 1997, Kinepolis has made various attempts to have the merger commitments lifted and numerous decisions of the Brussels' Court of Appeal and the BCA have followed. On 31 May 2017, the BCA again decided to partially lift the restriction on organic growth, subject to a two-year transition period, but left the other commitments in place. This decision was appealed by two competing cinema groups, and on 28 February 2018, the Court of Appeal found that the BCA had insufficiently justified its decision to lift the commitment and to impose a two-year transition period. The BCA adopted a new decision explaining and confirming its previous decision on 26 April 2018, but this decision was again appealed by a competitor and again annulled by the Brussels' Court of Appeal on procedural grounds. According to the Court of Appeal, the BCA could not decide on the case twice with the same members sitting in the Competition College. On 28 January 2019, Kinepolis attempted once again to have the remaining conditions removed. On 25 March 2019, the BCA decided to lift in part the commitment preventing Kinepolis from growing organically to the extent it would concern the establishment of new cinema complexes with less than seven movie theatre halls and less than 1,125 seats. In addition, the BCA prohibited Kinepolis from establishing any new cinema complex within a 10km range of its other cinema complexes or to expand such new cinema complexes beyond the thresholds imposed without the BCA's prior approval. The decision was again appealed. The Court of Appeal questioned the BCA's review of the commitment preventing organic growth and lifted this commitment, but referred the case back to the BCA to determine the appropriate transition period allowing Kinepolis' competitors to prepare for the removal of this restriction on organic growth on Kinepolis. On 11 February 2020, the BCA decided that after a transition period of 18 months (from 12 August 2021), Kinepolis will again be allowed to open new cinemas without the BCA's prior approval. The BCA took into account the changed conditions in the market in which at least two large international cinema groups (UGC and Pathé) were now active and that all Kinepolis' competitors could have reasonably foreseen the future removal of the condition prohibiting organic growth. This transition period was deemed to be sufficient for competitors to take measures to prepare to compete with any expansion of Kinepolis.
Telenet Group BVBA/De Vijver Media NV
On 13 May 2019, the BCA conditionally approved the acquisition of sole control by Telenet Group BVBA (Telenet) over De Vijver Media NV (DVM), in which the former already owned 50 per cent.10 The concentration was first notified to the European Commission, which decided to refer the case to the BCA at its request following Article 9 of the EU Merger Regulation in November 2018. Telenet is a Belgian cable network operator active in the provision of fixed internet, fixed telephone services and cable TV. DVM is the Belgian holding company of a group of companies active in the field of television broadcasting and related services, the sale of advertising and the production of television programmes. The loss of joint control over various links in the value chain would create a unit with Telenet having sole control over a fully vertically integrated group that would, post-transaction, comprise the production of content, TV channels and a dominant distribution platform. As Telenet would become a dominant vertically integrated group, the BCA identified a number of non-coordinated vertical effects, including the foreclosure of competing platforms and the partial foreclosure of access to Telenet's distribution platform from competing broadcasters. To limit these concerns, Liberty Global Plc (Telenet's parent company) offered various commitments. The first concerned the guarantee of access to DVM channels for competing TV platforms. The second addressed the ranking of channels in the Telenet platform's digital broadcasting and programme guide. The third commitment prohibited discrimination between the distribution fees paid by competing broadcasters compared to the fees paid by Telenet's own channels. The fourth concerned the access of channels to the platform, allowing them to advertise in a targeted way on the set-top boxes of the Telenet platform's customers. Last, Telenet committed to guarantee non-discriminatory access to audience data for all channels distributed on the Telenet platform, whether the channels were owned or linked to Telenet, or whether they were competing channels. The BCA considered that these commitments targeted the general concern that the concentration would allow Telenet, as a dominant platform, to grant an advantage to its platform and to undertakings affiliated with its platform compared to third parties present on the platform who directly compete with Telenet as TV channels and content producers. The commitments will only expire seven years after the decision and a trustee was appointed to monitor Telenet's compliance.
Anders Hedin/Group Jacobs
In its decision of 1 July 2019, the Competition College cleared the concentration between Hedin Belgien Bil AB, I A Hedin Bil AB (Anders Hedin) and J-Automotive BVBA (the Jacobs Group).11 Anders Hedin, the acquiring party, and the Jacobs Group operate in Belgium as authorised Daimler dealers for the Mercedes and Smart brands, including passenger cars, light commercial vehicles (LCV) and trucks. Anders Hedin carries out its activities in 13 locations, while the Jacobs Group has two branches located in Sint-Niklaas and Lokeren. The parties' activities include the sale, repair and maintenance of bodywork and over-the-counter sale of spare parts and accessories for the three types of vehicles. Given the local market definition and the transaction's single-brand character, the Auditor used a geographical proxy to assess the parties' market shares on the local relevant markets. Assuming that (inter-)brand competition at a local level is symmetrical to the market position of the brand or brands, so that the parties' local market position will not deviate significantly from the national and provincial market shares of the brand or brands, the Auditor analysed the Mercedes' market share at the national and provincial level and compared it with the parties' total volumes. The Auditor identified three horizontally affected markets: the local brand-specific market for the maintenance and repair of (1) passenger cars, particularly at Anders Hedin in Gent and Jacobs in Lokeren, (2) LCV, particularly at Anders Hedin in Gent, Ninove and Zottegem and Jacobs in Lokeren and Sint-Niklaas, and (3) medium and heavy trucks, particularly at Anders Hedin in Gent and Ninove and Jacobs in Sint-Niklaas. In these markets, the Auditor analysed whether, in these specific areas, customers would have sufficient fallback options for repair and maintenance work post-transaction. To that end, both the position of the authorised repairers of the Mercedes brand and the position of the independent repairers were taken into account. Given the analysis of the market concentration and the effective fallback options for the parties' customers in the locations where the transaction could potentially affect competition, the Prosecutor concluded that the transaction would not give rise to any significant non-coordinated horizontal restrictive effects on competition in the relevant local catchment areas in the identified affected markets. The Competition College followed the Prosecutor's reasoning and cleared the concentration.
On 8 July 2019, the Competition College accepted that MIG Motors BVBA (MIG Motors) fully acquired NAM NV (NAM).12 MIG Motors is part of the NV Fleetinvest group and is active in various sites, such as Evergem, Aalter, MyCenter, Lievegem, Destelbergen and Zwijnaarde. Both parties are active in the retail sale of new and pre-owned passenger cars and LCVs from the Volkswagen, Audi and Skoda brands. This encompasses additional activities such as repair and maintenance, bodywork and sale of parts and accessories. Note that in assessing the relevant markets, the Auditor analysed the parties' activities in a separate market for bodywork, finding that body repair has a number of clearly distinct market characteristics compared to the market for maintenance and repair, including a separate infrastructure and organisation, the market-specific role of insurance companies and an essentially multi-brand approach. However, this specific product market was not considered a relevant market in this transaction. As happened in the Anders Hedin/Jacobs decision discussed above, the Auditor used a geographic proxy to approach the parties' local market shares. Based on that local approach, the effects of the transaction were assessed on the following (horizontally) affected markets: (1) the local brand-specific market for maintenance and repair of Skoda passenger cars (MIG Motors in Destelbergen and Aalter, and NAM Noord); (2) the local brand-specific market for maintenance and repair of Volkswagen passenger cars (MIG Motors in Zomergem) and (3) the local brand-specific market for maintenance and repair of Volkswagen LCV (MIG Motors in Evergem and Zomergem, and NAM Noord). The Auditor examined whether there were sufficient fallback facilities for repair and maintenance work in these areas, which would prevent non-coordinated horizontal effects. By means of its competitive analysis, the Auditor concluded that both accredited garages on the periphery of the catchment areas and independent garages in the catchment areas exerted significant competitive pressure on both the pricing and the quality of service of the parties' garages, so that there was no risk of non-coordinated effects. As a result, the transaction would not significantly impede effective competition in the Belgian market or in a substantial part of it, and the Competition College approved it.
On 23 July 2019, the Competition College of the BCA approved the acquisition of Alvadis NV (Alvadis) by Conway – The Convenience Company Belgium NV (Conway).13 Conway is active in the distribution of food-to-go, tobacco products and pre-paid vouchers in Belgium, which it supplies to (large) retail chains and (smaller) independent retailers. Alvadis is mainly active in the distribution of pre-paid vouchers and the sale and lease of technologies related to payment systems. The main overlap between the parties' activities lies in the distribution of pre-paid vouchers (telecom vouchers, payment vouchers for both online and offline transactions, and gift cards). The Prosecutor identified the relevant horizontal markets as being the Belgian market for the (1) purchase and (2) distribution of pre-paid vouchers. While the parties would have a combined market share of 35 to 40 per cent in the market for the purchase of pre-paid vouchers and 45 to 50 per cent in the market for the distribution of pre-paid vouchers, and although those markets are highly concentrated, the Prosecutor found that the transaction would not raise competition issues. Indeed, the Prosecutor set aside the risks for non-coordinated horizontal effects, taking into consideration that there are no barriers to switch from one distributor to another and that such a switch does not generate high costs. First, the Prosecutor considered that the final consumer would not have to pay a higher price for the pre-paid vouchers post-transaction, as the distributors do not have any influence on the prices, which are solely determined by the suppliers. Second, despite the parties' high market shares, they do not have purchasing power with regard to the suppliers, which have alternative channels to sell their products. Third, both small and more important clients can easily switch to other distributors at low costs. Finally, there would still be various competitors on the post-transaction market that have a high capacity to develop easily in the markets concerned. The Prosecutor also found that as the market for the distribution of pre-paid vouchers is a non-transparent market, there would be little risk of coordinated effects. In light of the above, the Prosecutor argued that the transaction would not entail anticompetitive non-coordinated horizontal effects and the Competition College consequently declared the concentration admissible.
AVS Group GmbH/Fero Group
On 5 September 2019, the BCA approved the acquisition by AVS Group GmbH (AVS) of exclusive control over 3F NV, the holding company of the Fero Group (which includes Fero Signalatie NV, Signaroute SPRL, Signco BVBA, Haerens Invest NV, Admibo BVBA, Safetybloc BVBA, Moddy BVBA and Today Invest BVBA).14 AVS mainly sells equipment for temporary traffic signalling in Belgium, such as mobile lane separators, mobile traffic lights and temporary road markings. The Fero Group is mainly active in the provision of temporary traffic signalling services in Belgium. As AVS supplies equipment for temporary traffic signalling to providers of temporary traffic signalling services, including the Fero Group, there is a vertical relation between the parties. Given the parties' vertical relation, the Prosecutor identified the relevant markets as the Belgian market for the supply of temporary traffic signalling services and the European market for the supply of temporary traffic signalling equipment. The Prosecutor mainly assessed the non-coordinated vertical effects of the concentration, particularly the risks of (1) foreclosure of the supply of temporary traffic signalling equipment to competing providers of temporary traffic signalling services, and (2) foreclosure of suppliers of traffic signalling services to equipment suppliers. First, taking into account the parties' low post-transaction market shares in the market for the supply of temporary traffic signalling equipment and the sufficient alternatives for other suppliers of temporary traffic signalling services, the Prosecutor concluded that parties would not be able to foreclose competitors. Second, the Prosecutor analysed whether AVS's competitors would be foreclosed from the market if the Fero Group were to decide after the transaction to purchase only temporary traffic signalling equipment from AVS. Even if the Fero Group has a post-transaction market share of 35 to 45 per cent in the market for temporary traffic signalling services, this market power is relative because the market for the supply of temporary traffic signalling equipment is European and suppliers are active throughout Europe, supplying this equipment to providers active within Europe. In other words, AVS's competitors would in any event not be able to be foreclosed from the market since they would still be able to supply temporary traffic signalling equipment to other market players in Europe. The Prosecutor did not identify risks of coordinated effects and concluded that the concentration would not significantly impede competition in the Belgian market, and the Competition College sided with the Auditor.
Boulanger Group SAS and High Tech Multicanal Group SA/Krëfel NV, Assureka SA, Hifi International SA and Tones BVBA
On 12 November 2019, the BCA's Competition College authorised the High Tech Multicanal Group SA (HTM) and the Boulanger Group SAS (Boulanger) to acquire Krëfel NV (Krëfel), together with its two subsidiaries Hifi International SA and Tones BVBA, and Assureka SA.15 HTM is the holding company that oversees Boulanger and the Electro Dépôt Group (Electro Dépôt). Electro Dépôt operates 'hard discount' retail stores for household appliances as well as a website. Krëfel is a Belgian chain of retail stores for household appliances and fitted kitchens and also operates a website. The Prosecutor distinguished between the market for the supply of household appliances and the market for the retail sale of household appliances. Within the market for the retail sale of household appliances, three relevant markets were identified: (1) the retail sale of 'white' goods,16 (2) the retail sale of 'grey' goods17 and (3) the retail sale of 'brown' goods.18 An important contention point when defining the relevant markets concerned whether to include online sales in the product market. While certain elements such as the development of the multi-channel model in the sector and the relative comparability of the offline and online offer could indicate a single market, the Prosecutor considered it premature to include online sales in the market for the retail sale of household appliances. Indeed, the penetration of online sales remains relatively low in Belgium. Their geographical distribution is not yet homogenous and the pricing policy of pure online players is not comparable to that of physical stores. The Prosecutor analysed the three product markets within the market for the retail sale of household appliances both on a national and local level. On a local level, the Prosecutor identified one affected market, namely the market for the retail sale of white household appliances in the catchment area around Krëfel Waremme. Although online sales were not considered as part of the relevant markets at hand, the Prosecutor, in its competitive analysis, assessed whether online sales exert sufficient competitive pressure to prevent potential non-coordinated effects.19 The Competition College considered that the analysis of a local market can be decisive for its decision only if, in a particular local market, it is sufficiently large to constitute a substantial part of the Belgian market. Because the Prosecutor's competitive analysis had not identified any elements that could prevent a clearance decision, there was no need to rule on the question of whether the local market in the area around Krëfel Waremme constitutes a substantial part of the Belgian market within the meaning of Article IV.9 of the Code of Economic Law. The Competition College therefore authorised the concentration.
The merger control regime
As mentioned in Section I, concentrations must be notified in Belgium if the undertakings concerned, taken together, have a total turnover of more than €100 million in Belgium,20 and if at least two of the undertakings concerned each have a turnover of at least €40 million in Belgium, unless the concentration has a 'Community dimension'21 and thus must be notified to the European Commission. The relevant turnover is the consolidated sales turnover in Belgium during the preceding financial year. On the seller's side only the Belgian turnover generated by the target company (or companies) (or sold business) should be taken into account.22 The parties must obtain approval for the proposed concentration before it can be implemented.23
In 2006, the 'significant impediment to effective competition' test was introduced in Belgian competition law as the substantive test for clearance, aligning it with the EU Merger Regulation. A particular feature of the Belgian merger control system is that if the post-merger joint market share of the parties in any relevant horizontal or vertical market does not exceed 25 per cent, then the transaction must be approved by the Competition College.24
The first step in the notification procedure usually consists of pre-notification contacts with the Competition Authority, in particular with the Prosecutor. The Code of Economic Law does not oblige the parties to make pre-notification contacts, but it is highly recommended25 and has become standard practice. It is also not uncommon that the Authority asks the parties' consent to start its investigation and send out requests for information to third parties already during the pre-notification stage. In principle, a formal notification may only be submitted after the informal approval of the Prosecutor-General has been obtained in the context of such pre-notification contacts. These contacts can take place via telephone or email, or in face-to-face meetings. The discussions usually take place based on a draft notification. These contacts have several purposes, including:
- the parties and the Prosecutor can discuss a number of essential points (such as whether the concentration must be notified, whether the simplified procedure could be used and what information must be provided);
- reducing the risk of the Prosecutor finding the notification to be incomplete (which has a significant impact on the notification's timing);
- the Prosecutor can, at the parties' request, exempt the notifying parties from providing certain information,26 which can make the notification less onerous; and
- they allow the parties to understand the Prosecutor's point of view on, for example, the market definition, and to more accurately estimate whether Phase I clearance is likely to be granted.
For the notification itself, the parties must use the CONC C/C form.27 By completing this form, the parties provide a wide range of information on, among other things, the concentration, the parties, their economic activities, the relevant markets and the effects of the concentration on the relevant markets. The information provided must be correct and complete,28 otherwise the notification cannot have any effect.29 In general, the notification obligation falls on the party acquiring control through the concentration.30 In the case of a merger between two formerly independent companies, the obligation falls on both parties.31 The concentration must be notified after the agreement's conclusion and before its implementation. Nevertheless, the parties can notify a draft agreement if they declare that it will not significantly differ from the proposed agreement on all relevant points from a competition law perspective.32
The notification must be made in Dutch or in French.33 The documents attached to the notification must be filed in their original language. If that language is not Dutch, French or English, a translation into the notification language must be added.34 The notification, including its annexes, must be sent to the BCA for the attention of the Prosecutor-General in three copies, either by registered post or by courier with acknowledgment of receipt, using the address indicated on the BCA website. At the same time, an electronic copy of the notification and its annexes must be sent by email to the Secretariat of the BCA for the attention of the Prosecutor-General, using the email address indicated on the BCA website.35
As is the case in European merger control, the parties must suspend the implementation of the merger until it has been cleared.36 Failure to respect this standstill obligation can result in fines of up to 10 per cent of the notifying parties' annual turnover.37 While the Code of Economic Law of 2013 took into account only the Belgian turnover for the calculation of the fine, the new law provides that the maximum fines will now be capped at 10 per cent of the worldwide turnover of the infringing undertaking.38
In exceptional circumstances, the President can permit the parties to implement the merger before it has been approved, but such an exemption must, in principle, always be requested before the merger's implementation.39 If incorrect or incomplete information is provided in a notification or a request for information, the information is not provided on time, or the notifying parties hinder or prevent the investigation, the notifying parties can be sanctioned with fines of up to 1 per cent of their respective annual turnovers.40
The Belgian Competition Act makes a distinction between the simplified merger procedure and the regular merger procedure.
i Simplified procedure
On 1 October 2006, the simplified merger procedure was introduced in Belgian competition law. Before that date, the simplified procedure was based on 'soft law'. It was only on 8 June 2007 that the General Assembly of the Council approved this procedure's detailed rules and thus replaced the previous soft law rules.41 The Rules were complemented by additional rules on 8 January 2020 to extend the scope of the simplified procedure.
The simplified procedure is highly practical, and today the vast majority (up to 80 per cent) of notifications are made using this procedure.
The simplified procedure has two essential characteristics: first, the Prosecutor examines the merger and decides whether to authorise it (and not the Competition College); second, the simplified procedure is very short, as the Prosecutor has to make a final decision within 15 working days of having received the notification (unless a request for information is sent to the parties, in which case the deadline can be extended until the information has been received according to the stop-the-clock mechanism introduced in 2019).42 The amount of information that must be filed is also substantially less than in the regular procedure.
The parties can choose the simplified procedure for the following categories of concentrations:43
- two or more undertakings acquire joint control over a joint venture on condition that the joint venture is not active or is only active to a small degree on the Belgian market, when the joint venture's turnover or the turnover of the brought-in activities in Belgium, or the turnover of both, is less than €40 million; and the total value of the transfer in assets to the joint venture in Belgium is less than €40 million;
- none of the parties to the concentration are active on the same product and geographical markets, or on a product market situated upstream or downstream of a product market on which one or more parties to the concentration is active;
- two or more of the parties to the concentration are active on the same product market and geographical market (horizontal relationship), on condition that their joint market share is less than 25 per cent; or one or more parties to the concentration are active on a product market upstream or downstream of a product market on which another party to the concentration exercises activities (vertical relationship), on condition that their individual or joint market shares amount to less than 25 per cent; and
- a party acquires sole control over an undertaking over which it already exercises joint control.44
On 8 January 2020, the following three categories of mergers, for which the simplified procedure can be used, were added:
- the combined market share of the parties to the proposed merger is below 50 per cent and the increase in the Herfindahl–Hirschman Index is less than 150;
- the combined market share of the parties to the proposed merger is below 50 per cent and the increment in the parties' market share resulting from the proposed merger is less than 2 per cent; and
- in view of all the circumstances, the merger does not raise any significant competition concern and (1) where the parties are active in the same markets, the parties' combined market share does not exceed 40 per cent in any market; or (2) where the parties are active in vertically affected markets, the parties' market share in either the relevant downstream or upstream market is less than 40 per cent.
As mentioned above, the Prosecutor has only 15 working days from the notification45 to decide whether the conditions for the simplified merger procedure apply and whether the concentration raises any objections46 or doubts as to its permissibility.47 If the Prosecutor fails to come to a decision before the deadline, the merger is deemed to have been approved.48 If the Prosecutor concludes that either the conditions for applying the simplified procedure are not fulfilled or the concentration raises objections, the use of the simplified procedure will be rejected and a full notification under the regular procedure must be made.49 Moreover, the timetable for the regular proceedings will only start running after the new filing is made, as the simplified notification will be deemed to have been incomplete from the start. If the Prosecutor accepts that the conditions for the simplified procedure apply and does not find any objections, the merger must be approved. In this respect, it is also useful to refer to a peculiarity of Belgian merger control that obliges the Authority to approve any merger where the parties' Belgian market share does not exceed 25 per cent, which will often be the case in simplified merger filings. The Prosecutor informs the parties of the decision by post, which is deemed by law to have the value of a decision of the Competition College for the application of Book IV of the Code of Economic Law.50
Even though the simplified procedure is formally included in Book IV of the Code of Economic Law, it still entails some uncertainty for the parties. First, there is uncertainty as to timing. As set out above, a ruling that the simplified procedure cannot be used means that the parties have to start regular proceedings from scratch. Even if the Prosecutor during the pre-notification contacts indicates that the concentration qualifies for the simplified procedure, nothing is certain, especially given the wide interpretation of the 'no objection' criteria, which can allow third parties to force the notifying parties into a regular notification by filing objections. This uncertainty is increased by the absence of any right to appeal against a Prosecutor's decision to revert to the regular procedure.
ii Regular procedure
The regular procedure is divided into two phases (Phase I and Phase II), which each consist of an instruction and a decision stage. Once a complete notification has been filed, the Prosecutor will open a Phase I procedure. At this point, a summary of the notification is published in the Belgian Official Gazette and on the Competition Authority's website. The Prosecutor gathers information and submits a reasoned decision proposal to the Competition College, who takes the final decision to either approve the merger (possibly subject to certain conditions) or to open a Phase II procedure.
Book IV of the Code of Economic Law contains fixed time frames for both the decision and the investigation. Once the concentration has been notified, the Prosecutor must submit a reasoned decision proposal to the Competition College within 25 working days of the day after the notification.51 A copy of this report will also be sent to the parties and a non-confidential version to the representatives of the employee organisations of the undertakings involved.52 If the file is incomplete, the time period only starts when the complete information is received. If commitments are presented, the time limit is extended by 10 working days.
No less than 10 working days after the communication of the Prosecutor's reasoned decision proposal, the Competition College organises a hearing during which the parties and any interested third parties are heard.53 From the moment the Prosecutor's decision proposal is submitted, the parties must be given full access to the file, except for confidential submissions from third parties. Third parties, on the other hand, only have a right of access to the file in limited circumstances. The Competition College must decide whether to approve the merger within 40 working days of the day after the notification.54 This deadline is extended by 15 working days in cases where commitments are proposed. Furthermore, the parties can request an extension of the deadline after the investigation has ended.55 This extension may be particularly relevant if the parties need more time to convince the Competition College of their case, offer commitments, etc., to avoid the opening of a Phase II investigation.
If the Competition College has serious doubts about approving the merger, it can order an additional investigation under the Phase II procedure. The parties have 20 working days after such a decision to propose commitments.56 The new Act provides that the Prosecutor can extend that deadline by another 20 days. Furthermore, the Prosecutor must submit its revised decision proposal within 30 working days of the decision.57 The parties may submit their written observations within 10 working days of the submission of the revised decision proposal. If the parties submit written observations, the Prosecutor may submit an additional decision proposal within five working days.58 A hearing must be held no less than 10 working days after the submission.59 The Competition College must decide whether to approve the merger within 60 working days of initiating the Phase II procedure.60 This deadline can be extended at the parties' request.
If the Competition College fails to make a Phase I or Phase II decision by the deadlines set out above, the merger is deemed to have been approved.
The Competition Act does not grant interested third parties the right to access the file, but only to be heard by the Competition College.61 However, the Supreme Court62 has somewhat limited this principle by ruling that, in exceptional circumstances, an interested third party can obtain access to the file to the extent that this access is limited to a non-confidential version and that such access is strictly necessary to allow the third party to set out its views on the merger. In practice, it seems that the Competition College is more inclined to refuse access than to grant it. However, in the Mediahuis decision, the Brussels Court of Appeal confirmed that the BCA is obliged to give access to the concentration file that was submitted to the Competition College during the appeal proceedings.63
Once a decision has been taken, notifications must be sent to the parties, the relevant Minister, anyone who might have an interest and anyone who has requested to be kept informed. The decisions are also published in the Belgian official gazette and on the Competition Authority's website.64 Before publication, the President of the Competition College will decide which, if any, passages in the decision are confidential,65 and will invite the parties to submit their views on this confidentiality.
Appeals against decisions made by the Competition College can be made to the Brussels Court of Appeal and, subsequently, the Supreme Court. The appeal could be against the Competition College's decision to approve or refuse a merger or against default approvals when the Competition College failed to make a decision by a specified deadline.66 The appeal could be lodged by the parties, by interested third parties who have requested to be heard by the Competition College and by the Minister of Economic Affairs. The appeal must be lodged within 30 days of the notification of the decision.67
Before the Court of Appeal, the parties present their arguments in writing and at a hearing. The Minister of Economic Affairs can also submit written arguments to the Court of Appeal. Since the entry into force of Book IV of the Code of Economic Law, the BCA, represented by the President, can also intervene as a party in the proceedings and submit written arguments. At any time, the Court of Appeal can call the parties to the case before the Competition College when there is a risk that the appeal may affect their rights or obligations.68 In cases concerning the admissibility of concentrations, the Court of Appeal does not have full jurisdiction, but will only rule with the power of annulment.69
An appeal to the Court of Appeal does not suspend the Competition College's decision,70 and it continues to have full effect until the Court of Appeal issues its judgment. However, at the request of one of the parties, the Court of Appeal can order the suspension of the Competition College's decision. In practice, the suspension of a College decision usually is of limited interest to the parties, as they are bound by the suspension obligation of the merger until it is approved. However, in the Cable Wallon case, it turned out to be useful when the Court of Appeal overruled a tacit admissibility decision and reopened the investigation.71 On the other hand, a suspension might be useful to third parties who have appealed against a decision to ensure that the merger is not implemented.
Other strategic considerations
As is the case in all merger control proceedings, time is of the essence. Under the Belgian merger control system, a third party could try to prolong merger procedures to the disadvantage of its competitors. A third party could, for instance, prevent the merging parties from enjoying the benefits of the simplified (and much faster) procedure by raising objections to the merger.
Regarding timing, the deadline imposed on the prosecutors to issue decisions in simplified merger filings was shortened to 15 working days in 2013. This term of 15 working days is very short for the investigatory team. Therefore, it is important to start pre-notification talks, which can take months, well before the actual merger filing. On the other hand, as more and more issues are investigated and solved during the pre-notification period, decisions are often taken before the end of the legal deadline for the decision. In the case of a simplified procedure, it is also advisable to start pre-notification contacts to obtain as much certainty as possible about the Prosecutor's preliminary view on whether the conditions for a simplified procedure have been fulfilled and on the extent of the information that should be provided to convince the BCA that the simplified procedure's conditions indeed apply.
Outlook and conclusions
Since 2015, the number of notifications filed and the notification decisions issued has significantly increased when compared to previous years. In 2019, the number of concentrations filed under the regular merger control procedure remained as high as in 2017 and 2018. Several recent decisions have given rise to fines for procedural infringements (for negligent obstruction, for 'gun-jumping', and for non-compliance with commitments given). It is clear that the BCA expects the parties to a concentration to act diligently and that it will fine undertakings that omit to notify, do not promptly reply to requests for information in merger proceedings or do not, whether or not intentionally, comply with commitments imposed.
From the decisions that have already been issued under the regular merger control procedure since the entry into force of Book IV of the Code of Economic Law, it can be seen that it is not uncommon for admissibility decisions to be linked to complying with certain commitments. In this context, as is the case under European competition law, both behavioural and structural remedies can be accepted. Whereas the BCA seemed to be more inclined to impose behavioural remedies in the past, in recent decisions structural remedies have also been imposed (e.g., in the Delhaize/Ahold, Kinepolis/Utopolis and McKesson/Belmedis cases).
The Code of Economic Law provides that the BCA shall carry out an assessment of the two merger filing thresholds every three years, taking into account, inter alia, the economic impact and the administrative burden for undertakings. In 2018, the BCA stated that in view of the relatively high notification thresholds in Belgium, it saw no reason to raise these thresholds and after a stakeholder consultation decided not to modify the thresholds for the time being. However, as noted in Section I, a new Act was adopted on 25 April 2019 amending Belgian competition law on various other matters. In particular, the Act introduces the worldwide turnover for the calculation of fines, and a stop-the-clock mechanism suspending the term within which the Prosecutor must make a decision proposal, the term within which the College shall take its decision in regular proceedings and the term within which the Prosecutor has to make its decision in simplified procedures, with the time required for the parties to provide additional information requested or to offer commitments. The timing of the merger procedure will therefore become more uncertain. It remains to be seen how often the BCA will make use of its new powers to use this stop-the-clock mechanism. On the other hand, the burden on undertakings notifying a concentration and the time required to obtain a decision may decrease if the intended concentration falls within the scope of the additional categories of concentrations that qualify for a simplified procedure as of 8 January 2020. Finally, merger decisions are expected to be delayed following the covid-19 crisis. In a press release on 19 March 2020, the BCA invited companies to delay any concentration project that is not urgent.
1 Carmen Verdonck is a partner and Nina Methens is an associate at ALTIUS.
2 Code of Economic Law of 28 February 2013, Belgian Official Gazette 29 March 2013.
3 Despite the Competition College formally holding the BCA's decision-making powers, Book IV of the Code of Economic Law also grants certain decision-making powers to the College of Competition Prosecutors (for example, within the framework of the simplified merger procedure).
4 Articles IV.16 of Code of Economic Law.
5 Article IV.7, Section 1 Code of Economic Law. In May 2017, the Authority launched a consultation of stakeholders on the thresholds for notification and an assessment of whether they should be changed, but it was decided not to change the thresholds.
6 The most important royal decrees are the Royal Decree of 30 August 2013 on procedures with regard to the Protection of Economic Competition, Belgian Official Gazette 6 September 2013; and the Royal Decree of 30 August 2013 on the Notification of Concentrations of Undertakings in Accordance with Article IV.10 of the Code of Economic Law as inserted by the Acts of 3 April 2013, Belgian Official Gazette, 9 September 2013.
7 This mechanism allows the Prosecutor to extend a given deadline to give parties more time to provide information or offer commitments. Such decision suspends the term within which the Prosecutor has to render his decision proposal as well as the final term in which the College shall take its decision. Article IV.40 Section 1, Code of Economic Law.
8 Decision No. ABC-2019-C/C-11 of 15 February 2019 in Case No. CONC-C/C-18/0046, Ineos Oxide Limited/RWE Generation Belgium NV.
9 Decision No. BMA-2019-C/C-13 of 25 March 2019 in Case No. CONC-C/C-17/0014, application by Kinepolis Group SA for the annulment of the conditions imposed by the Competition Council in Decision No. 97-C/C-25 of 17 November 1997, as amended by the judgment of the Brussels Court of Appeal of 11 March 2010 in Case No. 2008/MR/22-23-24.
10 Decision No. BMA-2019-C/C-16 of 13 May 2019 in Case No. MEDE-C/C-19/0006, Telenet Group BVBA/De Vijver Media NV.
11 Decision No. BMA-2019-C/C-17 of 1 July 2019 in Case No. MEDE-C/C-19/0008, Hedin Belgien Bil AB, I A Hedin Bil AB/J-Automotive BVBA.
12 Decision No. BMA-2019-C/C-19 of 8 July 2019 in Case No. MEDE-C/C-19/0014, MIG Motors BVBA/NV Nieuwe Automobielmaatschappij.
13 Decision No. BMA-2019-C/C-24 of 23 July 2019 in Case No. MEDE-C/C-19/0015, Conway – The Convenience Company Belgium NV/Alvadis NV.
14 Decision No. BMA-2019-C/C-28 of 5 September 2019 in Case No. MEDE-C/C-19/0021, AVS Group GmbH/De Fero Groep.
15 Decision No. ABC-2019-C/C-40 of 12 November 2019 in Case No. CONC-C/C-19/0031, Boulanger – HTM/Krëfel.
16 Including hobs, stoves, ovens, built-in units, hoods, washing machines, dryers, dishwashers, refrigerators, freezers, small food-preparation appliances, coffee makers, food processors, irons and vacuum cleaners.
17 Including personal computers, monitors, peripherals (printers and scanners), keyboards, modular accessories and spare parts (memory cards and additional hard drives), software and telephony.
18 Including televisions, camcorders, hi-fi and audio equipment, digital appliances and DVD players.
19 The Prosecutor also analysed the parties' proximity, their post-merger pricing policy and the existence of sufficient local competition.
20 Article IV.7, Section 1 of the Code of Economic Law.
21 Article IV.11 Code of Economic Law.
22 Article IV.8 Code of Economic Law.
23 Article IV.10, Section 4 of the Code of Economic Law.
24 Article IV.66, Section 2, 2 of the Code of Economic Law.
25 The Rules adopted by the General Assembly of the Competition Council regarding the simplified notification of concentrations of 8 June 2007 recommend contacting the College of Competition Prosecutors at least two weeks before notification (see Section III.i). These Rules also remain applicable after the entry into force of Book IV of the Code of Economic Law and have been complemented by additional rules adding further categories of concentrations that can be dealt with under the simplified procedure from 8 January 2020.
26 Article 5, Section 4 of the Royal Decree on the notification of concentrations.
27 Annexed to the Royal Decree on the notification of concentrations. For the simplified procedure, form CONC C/C-V/S is used, which is annexed to the Rules adopted by the General Assembly of the Competition Council regarding the simplified notification of concentrations of 8 June 2007.
28 Article 4, Section 1 of the Royal Decree on the notification of concentrations.
29 Article 5, Section 2 of the Royal Decree on the notification of concentrations.
30 Article IV.10, Section 2 Code of Economic Law.
32 Article IV.10, Section 1 Code of Economic Law. In Case No. 98-C/C-11 of the Competition Council of 28 July 1998, Promedia CV/Belgacom Directory Services NV, Belgian Official Gazette 18 September 1998, p. 30,441, the Council ruled that an agreement that had not yet been approved by the works council was not sufficiently binding to be notified.
33 Article IV.92, Section 3, 5 Code of Economic Law.
34 Article 3, Section 4 of the Royal Decree on the notification of concentrations.
35 Article 3, Section 2 of the Royal Decree on the notification of concentrations.
36 Article IV.10, Section 4 Code of Economic Law.
37 Article IV.79, Section 1 and Article IV.80 Code of Economic Law.
38 This new maximum will apply only for infringements committed after the entry into force of the new Act on 3 June 2019. Infringements that have taken place and ended before the entry into force of the new law will be fined under the previous rules.
39 Article IV.10, Section 6 Code of Economic Law; for recent applications, see also Decision No. BMA-2019-C/C-28 of 2 May 2019 in Case MEDE-C/C-19/0021, AVS Group GmbH/De Fero groep and Decision No. BMA-2015-C/C-79 of 23 December 2015 in Case No. MEDE-C/C-15/0035, acquisition of Imtech Belgium Holding NV and Imtech Belgium NV by Cordeel Group NV Cordeel.
40 Article IV.82, Section 1 Code of Economic Law. See also Decision No. BMA-2015-C/C-31 of 30 September 2015 in Case No. MEDE-C/C-15/0017, acquisition of Humo NV, Story, TeVe-blad and Vitaya by De Persgroep Publishing NV, in which the Competition College ruled that the Guidelines on the calculation of fines may be used as guidance for the calculation of such fines. The same fines applied until the modification of Book IV of the Code of Economic Law in April 2019 for the failure to notify a merger, but this part of the legal provision was omitted by mistake in the new Book IV. It is expected that this mistake will be corrected by a legislative measure.
41 Rules adopted by the General Assembly of the Competition Council regarding the simplified notification of concentrations on 8 June 2007.
42 Article IV.69, Section 6 and Article IV.40, Section 1 Code of Economic Law.
43 Point II.3.2 of the Rules adopted by the General Assembly of the Competition Council regarding the simplified notification of concentrations of 8 June 2007 states that, in special circumstances, the simplified procedure cannot be applied. This can be the case where it is impossible to determine the exact market shares of the parties (e.g., on new or less-developed markets) or where markets with high entry barriers or a high degree of concentration are concerned. In decision No. BMA-2015-C/C-79 of 23 December 2015 in Case No. MEDE-C/C-15/0035, the acquisition of Imtech Belgium Holding NV and Imtech Belgium NV by Cordeel Group NV Cordeel, 'gun-jumping' was also considered to be a special circumstance to set aside the simplified procedure.
44 Point II.1 of the Rules adopted by the General Assembly of the Competition Council regarding the simplified notification of concentrations of 8 June 2007.
45 Article IV.70, Section 6 Code of Economic Law.
46 Article IV.70, Section 3 Code of Economic Law. This criterion was widely interpreted in case law. In the Belgian Airports/Brussels South Charleroi Airport case, the Prosecutor refused the application of the simplified procedure merely because a third party voiced an objection against the concentration (Case No. 2009-C/C-27 of 4 November 2009, Belgian Official Gazette 22 January 2010).
47 Article IV.70, Section 5 Code of Economic Law. Strangely, this Paragraph ('doubts as to the permissibility') does not use the same criterion as Paragraph 3 ('no objection').
48 Article IV.70, Section 6 Code of Economic Law.
49 For example, Decision No. ABC-2014-C/C-03 of 26 March 2014 in Case No. CONC-C/C-13/0030, Tecteo/EDA-Avenir Advertising, which was notified under the simplified procedure but had to be renotified under the regular procedure as some of the market definitions were contested and the transaction raised multiple competition concerns according to the auditor.
50 Article IV.70, Sections 3 and 4 Code of Economic Law.
51 Article IV.64, Section 1 and 2 Code of Economic Law. However, the deadline can also be extended in the regular procedure, following the use of the stop-the-clock mechanism introduced in 2019; Article IV.40, Section 1 Code of Economic Law.
52 Article IV.64, Section 3 Code of Economic Law.
53 Article IV.65, Sections 3 and 4 Code of Economic Law.
54 Article IV.66, Section 3 Code of Economic Law. The deadline can also be extended in the regular procedure following the use of the stop-the-clock mechanism introduced in 2019; Article IV.40, Section 1 Code of Economic Law.
55 Article IV.66, Section 3, 1 and 2 Code of Economic Law.
56 Article IV.67, Section 1 Code of Economic Law.
57 Article IV.67, Section 2 Code of Economic Law. This deadline shall be extended by a period equal to the period used by the parties to present commitments, if any.
58 Article IV.68, Sections 1 and 2 Code of Economic Law.
59 Article IV.68, Section 4 and Article IV.65 Code of Economic Law.
60 Article IV.69, Section 2 Code of Economic Law. This deadline shall be extended by a period equal to the period used by the parties to present commitments, if any. The deadline can also be extended if the stop-the-clock mechanism is used; Article IV.40, Section 1 Code of Economic Law.
61 Article IV.68, Section 1 and Article IV.65 Code of Economic Law.
62 Court of Cassation, 22 January 2008, Tectéo/Brutélé.
63 Decision of the Brussels Court of Appeal of 19 November 2014 in Case No. 2013/MR/30, De Persgroep NV/Belgian Competition Authority and Corelio NV and Concentra NV.
64 Article IV.75, Sections 1 and 2 Code of Economic Law.
65 Article 74, Section 1 Code of Economic Law.
66 Article IV.90, Section 1 Code of Economic Law.
67 Article IV.90, Sections 4 and 5 Code of Economic Law.
68 Article IV.90, Section 7 Code of Economic Law.
69 Article IV.90, Section 2 Code of Economic Law. This was confirmed in the decision of the Brussels Court of Appeal of 19 November 2014 in Case No. 2013/MR/30, De Persgroep NV/Belgian Competition Authority and Corelio NV and Concentra NV.
70 Article IV.90, Section 3 Code of Economic Law.
71 Brussels, 25 January 2008, Tecteo/Brutélé, Case 2008/MR/1.