4.1.1. Before Notification

In the theoretical section on predictability, it was pointed out that decisions on single cases can have effects that reach far beyond the specific case: prohibitions signal a tough stance, and potentially welfare-enhancing mergers might not even be pursued due to fear of being prohibited by the antitrust authorities. This effect does not show up in any statistics on merger policy although it is potentially very important. We therefore decided to include a question that would give us at least an impression concerning the relevance of this effect. The firms were asked whether they had pursued any mergers between 1997 and October 2002 that were eventually not even notified to the Commission for fear of being prohibited. More than a quarter of all respondents (28%) had experienced such cases. This shows that the impact of European merger policy clearly reaches beyond the number of cases counted in Commission statistics.

Art. 4 Regulation 139/2004 provides that mergers must be notified “prior to their implementation and following the conclusion of the agreement, the announcement of the public bit or the acquisition of a controlling interest”. Yet, many companies decide to contact DG Comp before a merger is formally notified. There are a large number of possible reasons for this: they might, e.g., be interested in getting the very first evaluation of the merger. In the questionnaire, the reasons for contacting DG Comp before agreeing on the broad outlines of a deal were not looked into. It was simply asked whether enterprises contact DG Comp before the deal is concluded. Almost 36 % of all companies do. Some ten years ago, Neven et al. (1993) published
a study on the first experiences with European merger control. It also contained a survey among the firms that had already experienced the then new policy. We decided to ask a number of questions that had been asked some ten years ago in exactly the same way in order to produce comparable data.5 The question whether firms had contacted DG Comp before agreeing on the broad outlines of a deal is one of those. Neven et al. (1993, 140) had only elicited a positive response rate of 20% to this question. Early contacts with the Commission have thus almost doubled. This could mean that predictability has not improved. If it had, fewer pre-notification
talks should be the result.

Another question that was also asked ten years ago, would, however, not exactly support this hypothesis: We asked whether the pre-notification talks with DG Comp had led to “significant modifications” of the proposed merger. 12% of the companies answered that this was the case. Ten years ago, 12.8% of the respondents to Neven et al. had answered that “major modifications” had taken place. The relative number of modifications thus seems to have been rather stable.

Before a merger can be officially notified to the Commission, a questionnaire – the so-called Form CO – needs to be filled in. Complaints concerning the time requirements to fill this form in can often be heard. On average, companies need 64.4 person-days to prepare the form. Ten years ago, the average duration elicited by Neven et al. (1993, 140) was 45 days. Considering the importance of all the mergers notified at the European level, the time required to fill in the form does not appear to be overly excessive. But because one can hear so many complaints concerning the complexity of Form CO, we decided to add an open question that was to encourage respondents to make proposals how Form CO could be improved. It is, first of all, noteworthy that the necessity of extended information was almost universally acknowledged. 6 The Commission was, however, requested to display more flexibility depending on the merits of the individual case. It was further proposed that phase I proceedings should not come to a stop if only details in Form CO are missing. On a more specific level, it was proposed to shorten sections 8 (“General Conditions in Affected Markets”) and 9 (“General Market Information”). Another proposal made was that in order to reduce redundancy, section 6 (“Market Definition”) should be combined with section 8 (“General Conditions in Affected Markets”).

Another way to ascertain the necessary lead time before a merger can be notified is to ask for the number of weeks that elapse between the first contact with the DG Comp and notification. The average time passed was 6.3 weeks (6.5 weeks ten years ago). The time necessary has thus been very stable. It has remained, however, constant on a high level; on average, pre-notification talks last longer than phase I proceedings that are constrained to a single month.