Toughening Takeovers

Europe's Minority Stakeholders Face Greater Scrutiny from E.U. Regulators

Joaquin Almunia, the European Union's Competition Commissioner, speaks at a recent press conference.
  • Why it matters

    Why it matters

    European Union wants to extend merger reviews to companies that hold minority stakes in other companies and, as a result, can influence their performance.

  • Facts


    • A minority interest is a significant, but non-controlling ownership of a firm of less than 50 percent.
    • Current E.U. merger rules don’t allow for review of minority stakeholders, but such laws are in place in the United States, Japan and some European countries, including Germany.
    • Stakeholder companies would determine themselves whether there was a significant competitive issue that needed to be registered with Brussels.
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Antitrust chief Joaquín Almunia wants to expand how far Europe’s regulatory watchdogs can scrutinize companies that hold significant but non-controlling interest in other firms.

This bit of news comes from a government report that Mr. Almunia, European Commission vice president in charge of competition, recently released to the public.

“The experience of the past 10 years has shown there is still leeway to improve merger control in the European Union,” he said. “Regulators at the E.U. level should work with a modern set of tools to protect businesses and consumers from mergers that could interfere with competition.”

Companies can acquire minority stakes in competing businesses and, as a result, influence their performance. In effect, that could restrict competition in the market.

“The participation of (non-controlling stakeholders) could lead to significant antitrust law problems.”

Silvio Cappellari, Antitrust Lawyer, Schilling, Zutt & Anschütz in Brussels

Current E.U. merger-control regulations don’t allow the commission to review the impact of minority stakeholders. It is different in the United States, Japan and some E.U. countries, Germany among them. German officials have welcomed the proposal to expand E.U. merger controls.

“The participation of (non-controlling stakeholders) could lead to significant antitrust law problems,” said Silvio Cappellari, an antitrust law expert at the commercial law firm Schilling, Zutt & Anschütz in Brussels. “The experience in Germany showed that.”

It could be that the number of problem cases with minority stakeholders in Europe has risen recently, and the commission saw a need to take action.

Yet there is a flip side to the argument.  Extending the scope of merger controls to minority stakes would drastically increase the number of proceedings in Brussels.  Companies with non-controlling interest in other companies would now have to be reviewed, said observers in Brussels.  The process could drag on for months and expenses mount.

Mr. Cappellari said the commission’s proposal to expand antitrust reviews should come with clear limits.  Reviews of minority stakes should be limited to “horizontal” transactions between companies in the same market.

“This would have a significant advantage towards legal security,” he said. A lower limit for reviews might also make sense, he said – for example, cutting off for stakes of 15 percent or less.


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Expanding the scope of antitrust regulators will require approval by the E.U. Parliament. Source: DPA


According to the system envisioned by the European Commission, stakeholding companies would calculate as part of a self-evaluation whether a “significant competitive tie” exists between companies. If they find there is a competitive tie, the companies must register their plans in Brussels, including details about additional rights and market shares.

The commission would then decide within a certain period – 15 workdays is being discussed – whether they would open a formal review, do nothing or refer the case to antitrust officials in affected countries.

The commission is taking comments on the proposal until Oct. 3. Expanding the scope of antitrust regulators would then require approval by the E.U. Parliament and its 28 member states.

Thomas Ludwig is a Brussels-based correspondent for Handelsblatt. He can be reached at

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