Dutch regulator expands authority to investigate M&A deals

Competition authorities worldwide are taking steps to address potentially harmful mergers that fall below standard quantitative thresholds. The concern arises from activities like anti-competitive practices in local markets, roll-up strategies, stifling potential competition, and hindering future innovation. Their focus now shifts to the impacts of enterprises on competition rather than just their revenue size.

For instance, online platforms providing free services to consumers to reap profits later or pharmaceutical firms developing vaccines with future blockbuster potential. These transactions often escape standard merger control due to the lack of meeting turnover thresholds. Authorities worry that these deals may endanger competition when involving: (a) buy-and-build strategies enabling firms to become dominant by acquiring multiple smaller players; (b) acquisitions targeting low revenue but disruptive entrants/emerging competitors; and (c) “killer acquisitions” where established players buy out budding companies. As a result, many competition authorities are trying to expand their jurisdiction under existing laws.

Following the European Commission’s unsuccessful attempt in the Illumina/GRAIL case to establish a call-in system for below-threshold mergers, the European Court of Justice ruled in 2024 against the Commission’s approach. The court emphasized that only the EU legislature can review thresholds or create safeguards for transaction scrutiny by the Commission. Despite this setback, individual member states can refer cases below thresholds to the Commission under the existing Article 22 EUMR.

Heightened awareness of these risks has led twelve countries in the European Economic Area to introduce call-in powers for their competition authorities. Additionally, gatekeepers under the Digital Markets Act must disclose below-threshold acquisitions to the European Commission. This sharing of information is gradually being incorporated into merger approval conditions. Meanwhile, the EU and national authorities treat consecutive acquisitions as parts of a single deal under set criteria, broadening their oversight capabilities where applicable.

In the Netherlands, the regulatory landscape mirrors that of the EU, with the Authority for Consumers and Markets (ACM) part of a coalition that referred the Illumina/GRAIL case to the Commission. However, following the ECJ’s ruling, ACM will now only refer mergers subject to Dutch turnover rules to the European Commission. They push for a call-in power to allow scrutiny of transactions not meeting local thresholds. The ACM’s chairman advocates for this power, citing “small mergers, big problems” and garnering support for such a measure.

Expanding its jurisdiction, the ACM is now investigating the Brink’s/Ziemann merger for potential abuse of dominance. Likewise, they claim the authority to review past and future buy-and-build acquisitions, provided any of these deals meet Dutch notification thresholds. The ACM’s broad interpretation of merger control rules signifies a shift towards proactive monitoring to safeguard competition.