Merger Control Thresholds
Merger Control Thresholds
What is Merger Control?
Merger control refers to the regulatory process by which competition authorities review and approve or block mergers and acquisitions (M&A) to prevent anti-competitive effects in the market. The goal is to maintain fair competition and protect consumer interests.
Purpose of Merger Control Thresholds
Merger control thresholds define the criteria under which a proposed merger must be notified to the competition authority for review. These thresholds are typically based on:
The turnover or revenue of the merging parties
The market share or asset value
The transaction value
Thresholds help regulators focus only on mergers that are likely to impact competition significantly, avoiding burdening small or insignificant deals with regulatory scrutiny.
Common Types of Merger Control Thresholds
Turnover-Based Thresholds:
If the combined turnover (sales revenue) of the merging entities exceeds a certain amount in the relevant jurisdiction, notification is mandatory.
Market Share Thresholds:
If the post-merger market share exceeds a specific percentage, the merger may be subject to review.
Asset-Based Thresholds:
The combined value of assets controlled may also trigger merger control review.
Jurisdictional Thresholds:
Some thresholds depend on the geographical market or location of the parties’ operations.
Examples of Threshold Criteria (Generic)
Combined worldwide turnover exceeds $1 billion AND combined turnover in the jurisdiction exceeds $100 million
At least two merging parties each have turnover above $50 million in the jurisdiction
Market share post-merger exceeds 25% in a relevant product or geographic market
Procedure After Thresholds Are Met
Parties notify the competition authority before completing the merger
Authority conducts an initial phase 1 review (usually 30–60 days)
If concerns arise, a detailed phase 2 investigation follows
Possible outcomes: clearance, conditional approval (with remedies), or prohibition
Important Case Laws Illustrating Merger Control Thresholds and Enforcement
Case 1: General Electric / Honeywell (2001)
Jurisdiction: European Union
Issue:
GE’s acquisition of Honeywell was notified as the combined turnover exceeded EU thresholds. The European Commission blocked the merger due to competition concerns despite US approval.
Significance:
Showed that meeting turnover thresholds triggers thorough scrutiny and that regulatory outcomes differ across jurisdictions.
Case 2: UPS / TNT Express (2013)
Jurisdiction: European Union
Issue:
UPS notified the merger as thresholds were met. The European Commission prohibited the deal citing competition concerns in the express delivery market.
Significance:
Highlighted the role of thresholds in triggering merger control and the Commission’s willingness to block deals harmful to competition.
Case 3: Facebook / WhatsApp (2014)
Jurisdiction: European Union
Issue:
Facebook acquired WhatsApp and notified the merger due to revenue thresholds. The Commission cleared the deal but scrutinized data and competition aspects.
Significance:
Illustrates how digital economy deals also fall within merger control scope when thresholds are met.
Case 4: Comcast / NBCUniversal (2011)
Jurisdiction: United States
Issue:
The transaction met the US Department of Justice’s thresholds and was cleared subject to conditions.
Significance:
Demonstrates how turnover thresholds in the US trigger merger review and conditional approvals are common remedies.
Case 5: T-Mobile / MetroPCS (2013)
Jurisdiction: United States
Issue:
The combined revenues exceeded thresholds, triggering review by the FCC and DOJ, which approved the merger with conditions.
Significance:
Emphasizes multi-agency reviews once thresholds are met, especially in telecom.
Case 6: L’Oréal / Avon (2020)
Jurisdiction: China
Issue:
L’Oréal’s acquisition of Avon triggered China’s merger control thresholds. The Chinese regulators reviewed and approved the merger after phase 1.
Significance:
Shows global application of turnover and asset thresholds beyond Western jurisdictions.
Importance of Correct Threshold Determination
Ensures compliance with mandatory notification requirements
Avoids penalties for failure to notify
Provides legal certainty and facilitates smooth merger processes
Protects competition by enabling timely regulatory intervention
Conclusion
Merger control thresholds serve as gatekeepers to the regulatory process, focusing competition authorities’ resources on transactions with potential market impact. Case laws from multiple jurisdictions reveal that meeting thresholds compels notification and regulatory scrutiny, which can result in approvals, conditions, or prohibitions based on competition assessment. Entities planning mergers must carefully analyze thresholds to ensure timely compliance and anticipate regulatory challenges.
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