State Aid Law Implications in Merger Control

1
State Aid Law Implications in Merger Control

• Alexandros Stratakis
• Van Bael Bellis
  
• 2 June 2007

2
European Courts Case Law

• ECJs Matra Judgment
• Antitrust and State Aid rules must be applied
  consistently
• (Matra doctrine)
• CFIs RJB Mining Judgment
• Turning Matra doctrine on its head
• CFIs BaByliss Judgment
• Limiting RJB Mining?

3
Commission Practice post-RJB Mining

• Metronet/Infraco
• HDW/Ferrostaal/Hellenic Shipyard
  ThyssenKrupp/HDW
• Deutsche Post /DHL(II) Deutsche Post/Exel
• Iberdrola/Scottishpower

4
Commission Practice (2)

• Different levels of scrutiny
• Sufficient Nexus or Causal Link?
• Worst case scenario approach
• Will the State Aid increase the financial and
  commercial strength of the beneficiary to an
  extent that competition concerns will arise?

5
Commission Practice (3)

• Relevant circumstances under worst case
  scenario approach
• Market shares of the parties
• Financial indicators of competitors in relation
  to indicators of the beneficiary of the alleged
  aid
• Size and financial strength of competitors

6
Do alleged State Aids have any impact on Merger
Control? (1)

• - If not a State Aid?
• - If an incompatible State Aid?
• - If compatible State Aid which gives a
  financial advantage to a party?

7
Do alleged State Aids have any impact on Merger
Control? (2)

• Opening the floodgates
• What if the financial advantage affects
  competition? How will that be accessed? Will the
  Commission prohibit the concentration on that
  basis only?
• Does any state measure affecting the parties
  deserve an analysis (tax, various other forms of
  regulation etc.)?
• Should other state measures having an effect on
  competitors or even countervailing measures by
  other states be investigated as well?

8
Some important conceptual differences

• Procedures with different addressees
• Procedures with different priorities, different
  assessment criteria and different timing
  considerations
• Procedural problems in private enforcement of
  state aid rules

9
Final remarks

• Examination of state measures complicates a
  procedure that should be fast and to the point
• Merger control is not designed to privately
  enforce State Aid rules
• State intervention should be taken into
  consideration (if necessary) in the analysis of
  the market in which the merging entities operate