EU Merger Control: The Power of Broad Remedies in Addressing Competition Issues

Strategic Insights -

The European Commission's decision to clear Unilever's acquisition of Sara Lee's household and body care business on November 17, 2010, serves as a reminder of the authority's power to require broad remedies from merging parties to address competition concerns. This approach can be both effective and challenging, as it may undermine the value and rationality of the deal, delay the implementation process, and incur additional costs.

Key Takeaways:

  • The European Commission has the discretion to assess the acceptability of proposed remedies, which must eliminate competition concerns, be permanent, and capable of ready and effective implementation.
  • A typical remedies package may include business divestitures, divestiture of production capacity, conduct commitments, licensing, and brand divestiture.
  • Licensing remedies are considered uncertain and may not address competition concerns, prompting the Commission to demand complete brand divestiture in some cases.
  • The scope of the merger remedy required can be critical to the success of the transaction, potentially affecting the rationale and value of the deal.
  • Merging parties should carefully evaluate the competitive conditions in the sector at the time of review and consider offering remedies that go beyond the strict competitive concern.

Statistics:

  • November 17, 2010: The European Commission cleared Unilever's acquisition of Sara Lee's household and body care business.
  • 7 Member States: The competition concerns related to the Unilever/Sara Lee decision were found to be relevant in only seven Member States.
  • Entire EU: The remedy required in the Unilever/Sara Lee decision covered the entire EU, including product markets not directly affected by the transaction.
  • 2165863939: The phone number of Jones Day's Cleveland office.
  • 2165790212: The fax number of Jones Day's Cleveland office.

Sources:

  • Mondaq LLC, 2010: "EU Merger Control: The Power of Broad Remedies in Addressing Competition Issues" article.
  • European Commission: Unilever's acquisition of Sara Lee's household and body care business decision.
  • Jones Day: Cleveland office contact information.
  • Mondaq.com: Article source.