AG Kokott Supports Application of Article 102 TFEU to Acquisitions of Small Promising Firms in Life Sciences and Other High Technology Sectors
- 14/10/2022
- News
AG Kokott Supports Application of Article 102 TFEU to Acquisitions of Small Promising Firms in Life Sciences and Other High Technology Sectors
In a non-binding opinion given to the Court of Justice of the European Union (CJEU) Advocate General Kokott yesterday expressed the view that concentrations, including mergers, that are not notifiable under the EU Merger Regulation or national merger control rules may still be caught by Article 102, Treaty on the Functioning of the European Union (TFEU), which bans abusive conduct by firms in a dominant position (see, attached opinion of 13 October 2022 in case C-449/21, Towercast v. Autorité de la Concurrence, the Opinion).
The merger control rules, which are applied before a transaction is consummated, are quite different from Article 102 TFEU, which is applied after the facts and, unlike the merger control rules, only catches conduct of dominant firms. Despite these differences, Ms. Kokott stressed their complementary nature in that Article 102 TFEU allows competition authorities to tackle a perceived enforcement gap. Ms. Kokott pointed out that specific acquisitions by powerful firms of innovative start-ups in fields such as “internet services, pharmaceuticals or medical technology” (Opinion, § 48) could be scrutinised under Article 102 TFEU, even if such acquisitions did not reach the thresholds for the application of the merger control rules. According to Ms. Kokott, this form of control after the facts would typically result in the imposition of a fine rather than in the divestment of the acquired company, as may happen under the merger control rules (Opinion, § 62), thus suggesting that the lack of legal security should not be an issue.
Ms. Kokott’s views regarding the application of Article 102 TFEU echo those of the General Court of the European Union which recently confirmed the power of the European Commission pursuant to Article 22 of the EU Merger Regulation to review, at the request of one or more Member States, proposed acquisitions and mergers that would normally escape its jurisdiction because the transactions do not satisfy the turnover thresholds specified by the EU Merger Regulation (see, Van Bael & Bellis Life Sciences News and Insights of 14 July 2022). While the opinion of Ms. Kokott does not prejudge the verdict of the CJEU, the acquisition of a promising high-technology firm may soon become subject to yet another layer of potential competition scrutiny and uncertainty.
See Opinion
