Municipal Approval Concentration  

1. Meaning

Municipal Approval Concentration refers to a competition-law situation in which a municipality, municipal authority, or municipally controlled undertaking has a decisive role in approving, authorising, facilitating, or participating in a concentration such as a merger, acquisition, joint venture, concession transfer, or change of control.

The issue is particularly important where the municipality:

• owns shares in one or more merging undertakings;
• controls a public utility or infrastructure undertaking;
• must approve a transfer of a licence or concession;
• controls access to municipal infrastructure;
• grants exclusive operating rights;
• participates in a joint venture with private undertakings; or
• uses regulatory approval to facilitate or protect a particular transaction.

A municipality's governmental status does not automatically remove competition-law considerations. The decisive question is often the nature of the activity and the source and effect of the municipal power.

2. Legal Framework

Municipal approval of a concentration can engage several competition-law principles.

A. Merger/concentration control

A transaction may constitute a concentration where there is:

1. a merger;
2. acquisition of control;
3. acquisition of assets constituting a business;
4. creation of a full-function joint venture; or
5. another transaction producing a lasting change of control.

If the relevant national turnover or jurisdictional thresholds are satisfied, the transaction may require notification to the competent competition authority.

In Denmark, merger control is principally administered under the Danish Competition Act, alongside the EU Merger Regulation where the EU thresholds and jurisdictional conditions are satisfied.

B. Municipal ownership does not automatically prevent a concentration

Two companies owned by the same municipality can still potentially constitute separate economic entities.

The relevant question is whether they were already part of the same economic unit and whether the transaction changes the quality or structure of control.

This is particularly important for municipal utilities, transport companies, energy companies, waste-management businesses and infrastructure operators.

C. Regulatory approval versus competition approval

A municipality may have authority to approve:

• planning changes;
• concessions;
• licences;
• transfers of municipal assets;
• changes in ownership;
• public-private partnerships;
• infrastructure arrangements.

But such approval is not necessarily equivalent to competition-law clearance.

Consequently, a transaction may require both:

Municipal approval + competition-law merger clearance.

D. Abuse of municipal regulatory power

A municipality can also create competition concerns if its approval power is used to:

• favour a municipal undertaking;
• exclude private competitors;
• impose discriminatory conditions;
• deny access to infrastructure;
• make approval conditional on purchasing another service;
• preserve a local monopoly; or
• facilitate a merger that forecloses competitors.

3. When Does Municipal Approval Become a Competition Issue?

A useful analytical framework is:

Municipal authority → Approval decision → Economic activity → Market effect → Competitive restriction

The principal questions are:

1. Is the municipality acting as a regulator or market participant?

This distinction is fundamental.

A municipality performing genuinely sovereign functions will normally be treated differently from a municipality:

• selling electricity;
• operating waste services;
• managing parking;
• running transport;
• supplying water;
• leasing commercial property; or
• participating in commercial joint ventures.

2. Is there a concentration?

The transaction must first be characterised.

For example:

Municipality A owns Company X and Company Y. X and Y are legally independent and compete for waste-management contracts. The municipality approves their merger.

The question becomes whether the transaction produces a lasting change of control and therefore constitutes a concentration.

3. Does the municipality possess decisive influence?

Control can arise through:

• majority shareholding;
• voting rights;
• contractual rights;
• board appointment rights;
• veto rights;
• concession arrangements; or
• other rights capable of determining strategic commercial decisions.

4. Does the transaction affect competition?

The authority may examine:

• market shares;
• barriers to entry;
• municipal procurement;
• access to essential infrastructure;
• vertical foreclosure;
• elimination of potential competitors;
• coordinated effects;
• customer choice; and
• efficiencies.

4. Important Case Laws

Case 1 — DIP SpA v Comune di Bassano del Grappa, Joined Cases C-140/94, C-141/94 and C-142/94

This is one of the most relevant EU cases for understanding municipal regulatory approval and competition.

The cases concerned Italian municipal rules regulating the opening of retail shops. The Court considered whether municipal/regulatory restrictions could conflict with EU competition and internal-market principles.

The significance is that municipal licensing and planning powers cannot automatically be treated as outside EU economic law merely because they are exercised by a public authority.

Principle

Where municipal regulation affects economic activity and market access, its competitive effects can become relevant under EU law.

Relevance to municipal concentration

If a municipality controls approval of a merger, acquisition or commercial restructuring, the approval should not be viewed in isolation from its impact on market access.

Case 2 — Jelgavas valstspilsētas pašvaldība v Konkurences padome, Case C-11/25

This is particularly important because it is a 2026 CJEU judgment directly involving a municipality.

The case concerned the municipality of Jelgava and the organisation of municipal waste-management services. The municipality had selected a partly municipality-owned undertaking without a tender. The Latvian Competition Council considered that the municipality had abused a dominant position. The case reached the CJEU concerning the distinction between the exercise of public authority and economic activity.

The Court's consideration demonstrates that the mere fact that an activity is connected with municipal functions does not end the competition-law analysis.

Principle

The critical issue is whether the relevant conduct forms part of the exercise of public powers or constitutes an economic activity.

Relevance

Where a municipality approves or structures a concentration involving a municipal undertaking, one must identify precisely:

• what function the municipality is performing;
• whether it is exercising public authority;
• whether it is acting as an economic operator; and
• whether the transaction affects competitive conditions.

This makes Jelgava highly relevant to municipal concentration analysis.

Case 3 — Höfner and Elser v Macrotron GmbH, Case C-41/90

The CJEU established the important principle that a public entity can potentially qualify as an undertaking where it engages in an economic activity.

The case concerned a public employment agency.

Principle

The legal status of the entity is not necessarily decisive. The nature of the activity matters.

Application

A municipality that:

• owns a commercial company;
• operates a utility;
• provides transport services; or
• participates in a commercial joint venture

may therefore be subject to competition-law analysis for that economic activity.

This principle is important when determining whether a municipality's participation in a concentration should be analysed purely as governmental action or also as conduct of an economic actor.

5. MOTOE v Elliniko Dimosio, Case C-49/07

The CJEU considered a situation involving a public authority with regulatory powers and involvement in an economic activity.

The case concerned the Greek motorcycle federation and its regulatory/organisational powers over motorcycle events.

Principle

An entity possessing regulatory powers can create competition concerns where it also participates in an economic activity and is capable of influencing the conditions under which competitors operate.

Application to municipal approval

This principle is particularly relevant where a municipality:

1. regulates a market;
2. owns an undertaking in that market; and
3. decides whether competitors receive approval.

That combination creates a potential conflict between regulatory authority and commercial interests.

6. SELEX Sistemi Integrati SpA v Commission, Case C-113/07 P

The case concerned Eurocontrol and the distinction between activities involving the exercise of public authority and economic activities.

Principle

Not every activity performed by a public body is economic.

The classification must be undertaken activity by activity.

Importance for municipal concentration

Suppose a municipality:

• approves urban development — regulatory;
• owns a construction company — potentially economic;
• approves the company's acquisition of a competitor — potentially mixed.

The competition analysis should therefore separate the municipality's different functions rather than treating the entire municipality as either an undertaking or a sovereign authority.

7. Commission v Italy, Case C-35/96 — Sanitary Inspection / Public Authority Principles

This line of EU jurisprudence illustrates the distinction between governmental functions and activities capable of constituting economic activity.

The broader principle is that the competition rules must be applied according to the substantive character of the activity, rather than simply according to the public or private status of the actor.

Relevance

Municipal approval of a concentration involving:

• waste management;
• utilities;
• public transport;
• parking;
• energy;
• telecommunications infrastructure

may therefore require separate examination of the regulatory and commercial components.

8. City of Lafayette v Louisiana Power & Light Co., 435 U.S. 389 (1978)

This U.S. Supreme Court decision is important for the comparative treatment of municipal competition restrictions.

The Court examined whether municipalities could automatically rely upon the state-action doctrine when engaging in anticompetitive conduct.

The judgment rejected the proposition that municipal status alone automatically immunises conduct from antitrust scrutiny.

Principle

Municipal status by itself is not sufficient.

The legal basis for the municipality's conduct and the relevant state policy must be examined.

Relevance

A municipality cannot necessarily argue:

"The transaction is immune from competition law simply because the municipality approved it."

The statutory authority and competitive consequences remain relevant.

9. Town of Hallie v City of Eau Claire, 471 U.S. 34 (1985)

This is another major municipal competition case.

The dispute concerned municipal sewage services and restrictions affecting surrounding areas.

The Supreme Court recognised that municipal conduct can receive state-action protection where the anticompetitive effects are a foreseeable consequence of a clearly articulated state policy.

Principle

Municipal authority must be connected to an adequately articulated governmental policy replacing competition with regulation or monopoly public service.

Relevance

For municipal approval concentrations, the existence of statutory authority is therefore important, but it should be analysed separately from:

• merger control;
• market effects;
• discrimination;
• foreclosure; and
• regulatory conflicts.

10. City of Columbia v Omni Outdoor Advertising, 499 U.S. 365 (1991)

This case concerned municipal regulation of billboard advertising and the state-action doctrine.

The Court recognised that municipal action could receive state-action protection where the relevant state policy was sufficiently articulated.

Competition significance

The case demonstrates the distinction between:

mere municipal authority

and

authority reflecting a state policy to replace competition with regulation.

This distinction can become important when a municipality claims that its approval of an exclusive transaction is protected governmental conduct.

11. Municipal Concentration in the Danish Context

For Denmark, the issue should be analysed principally under the Danish Competition Act and EU competition law, depending upon jurisdiction.

Danish merger control covers concentrations meeting the applicable jurisdictional thresholds, and the Danish Competition Council/Competition and Consumer Authority can approve transactions, including approvals subject to commitments.

Municipal participation creates several special situations.

A. Municipality as shareholder

Example:

Municipality owns 70% of A and 60% of B. A acquires B.

The first question is whether A and B were already under the same economic control.

If they were independent economic entities before the transaction, the transaction can potentially constitute a concentration.

B. Municipality creates a joint venture

Example:

Municipality + private energy company + infrastructure company establish a jointly controlled heating company.

The authority must examine:

• control;
• full-function status;
• turnover;
• horizontal overlaps;
• vertical relationships;
• access to infrastructure.

C. Municipal approval of a private acquisition

A municipality might possess approval powers because the target holds:

• a waste-management concession;
• transport rights;
• port facilities;
• district-heating infrastructure;
• parking rights; or
• another municipal concession.

Municipal approval does not necessarily substitute for merger-control clearance.

D. Municipality uses approval to favour its own undertaking

This creates a more serious competition issue.

For example:

Municipality refuses approval for acquisition by an independent operator but grants equivalent approval to its municipal undertaking.

Potential issues include:

• discriminatory treatment;
• foreclosure;
• denial of market access;
• abuse of dominance;
• conflict of interest;
• distortion of procurement;
• unlawful exclusive rights.

12. Relationship With Merger Control

The following distinction is important:

13. Main Competition Concerns

1. Concentration of municipal market power

A municipality may facilitate consolidation of two previously competing local operators.

This can reduce:

• number of competitors;
• customer choice;
• tender participation;
• innovation; and
• price competition.

2. Regulatory foreclosure

A municipality may control an approval mechanism that competitors need to enter the market.

If that power is used selectively, competitors can be excluded without a conventional private exclusionary agreement.

3. Conflict of interest

The municipality may simultaneously be:

regulator + shareholder + purchaser + infrastructure owner.

That creates a structural risk of preferential treatment.

4. Essential-facility access

Municipally controlled:

• ports;
• transport terminals;
• electricity networks;
• water systems;
• waste infrastructure;
• parking infrastructure

can sometimes constitute strategically important facilities.

Refusing access after a concentration may therefore create additional competition concerns.

5. Vertical foreclosure

A municipal undertaking acquiring an upstream or downstream business can potentially foreclose competing operators.

14. Hypothetical Example

Assume:

• Municipality M owns WasteCo A;
• Private company P owns WasteCo B;
• A and B compete for municipal waste contracts;
• Municipality M approves A's acquisition of B;
• M subsequently gives A exclusive access to municipal waste facilities.

The legal analysis should proceed in stages:

Stage 1 — Identify the transaction

Does A's acquisition of B create a lasting change of control?

Stage 2 — Identify the relevant market

For example:

• municipal waste collection;
• waste treatment;
• recycling;
• commercial waste management.

Stage 3 — Determine control

Does Municipality M control A before and after the transaction?

Stage 4 — Assess competitive effects

Examine:

• market shares;
• competitors remaining;
• entry barriers;
• procurement opportunities;
• infrastructure access.

Stage 5 — Examine municipal conduct

Was the approval:

• neutral;
• discriminatory;
• objectively justified;
• connected to statutory powers?

Stage 6 — Consider remedies

Possible measures include:

• divestiture;
• access commitments;
• non-discrimination obligations;
• separate accounting;
• removal of exclusivity;
• transparent approval procedures.

15. Key Doctrinal Distinction

The central distinction can be represented as:

Municipal approval
↓
Does it concern sovereign/regulatory activity?
↓
If yes → examine applicable public-authority/state-action principles
↓
If economic activity → competition law may apply
↓
Is there a concentration?
↓
Change of control / merger / acquisition / JV
↓
Jurisdictional thresholds
↓
Substantive competition assessment
↓
Market power + foreclosure + coordinated effects + efficiencies
↓
Approval / remedies / prohibition

16. Conclusion

Municipal Approval Concentration is not a standalone merger-control category so much as a recurring competition-law problem arising where municipal regulatory authority intersects with ownership, commercial activity, concessions or merger control.

The most important principles are:

1. Municipal status alone does not determine competition-law treatment.
2. The nature of the activity must be identified.
3. Municipal ownership can itself create questions concerning control and economic unity.
4. Regulatory approval does not necessarily replace formal merger-control clearance.
5. Municipal approval can raise concerns about discrimination, foreclosure and preferential treatment.
6. Public-authority powers and economic activities should be analysed separately.
7. The DIP, Höfner, MOTOE, SELEX, Lafayette, Hallie, Omni, and especially the recent Jelgava judgment provide useful doctrinal guidance.
8. In Denmark, the analysis should be integrated with Danish merger-control rules, EU merger control where applicable, and the EU principles concerning public authorities and economic activity.

The particularly important modern development is Jelgava (C-11/25), decided on 10 September 2026, because it directly addresses the boundary between municipal public-power functions and competition-law concepts in the context of municipal waste services.