The Luxembourg Competition Authority says that competition rules on abusive conducts do not apply to non-horizontal mergers


As is known, Luxembourg is the only jurisdiction within the EU to have not adopted a merger control regime. Notwithstanding that, on the basis of the Continental Can doctrine developed by EU court the Luxembourg Competition Authority (Conseil de la Concurrence or CdlC) can ascertain whether the implementation of a merger is compatible with the EU and corresponding national rules on abusive conducts. The CdlC followed this approach in Utopia where it considered whether a horizontal merger in the market for the management of movie theatres resulted in merged entity abusing its dominant position. More recently, in Fédération des Artisans v Encevo the CdlC dealt with the question whether the Continental Can doctrine could also apply to a non-horizontal merger.
The Encevo Group (Encevo) is the Luxembourg energy leader and a key supplier of natural gas and electricity. Paul Wagner & Fils (PWF) is the leading player in the Luxembourg market for fitting buildings with technical facilities. In July 2018 Encevo became the sole owner of PWF purchasing the whole equity capital of it. Later in November 2018, a trade association, Fédération des Artisans (FdA), filed a complaint with the CdlC. FDA argued that post-merger the merged entity would foreclose the competitors of the target company restraining competition that the Encevo acquisition of PWF would amount of the abuse of the dominant position enjoyed by Encevo.
The CdlC, however, rejected all the arguments submitted by FdA. The CdlC pointed out that, under Article 102 TFEU and the corresponding Article 5 of the Luxembourg Competition Law (LCL), it has no regulatory jurisdiction on merely potential abusive conducts. For these provisions to apply, there must be serious and concrete evidence that the business practice under scrutiny constitutes an abusive conduct within the meaning of Article 102 and/or Article 5 LCL. Yet, the CdlC observed that FdA only put forward unsubstantiated allegations whereas it did not produce any specific facts and circumstances in support.   
Next, the CdlC addressed the issue whether the Continental Can doctrine applied to the Encevo/PWF merger. Whether Encevo had a dominant position in the relevant markets was not sufficient to establish that Encevo would abuse such position when it purchased PWF. Unless a dominant firm abuses its market power, it does not breach competition. Importantly, Continental Can concerned a horizontal merger between undertakings active in the same market. On the contrary, the parties to the Encevo/PWF merger operated in different product markets: Encevo is active in the markets for the supply and distribution of electricity and gas natural while PWF is active in the market for fitting buildings with technical facilities. In other words, the merging parties provided services that were not substitutable. Because the merging parties operated in different markets, they did not compete with each other at the time of the acquisition. Therefore, the CdlC took the view that the consummation of the Encevo/PWF merger could not harm the competitors of the merging parties and closed the proceedings without an infringement decision.
Arguably, the take-away lesson from Fédération des Artisans v Encevo is that the CdlC is not ready to apply the Continental Can doctrine to assess the competition impact of non-horizontal mergers, as the conglomerate merger consummated with the Encevo acquisition of PWF.






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