Transatlantic Merger Relations: The Pursuit of Cooperation and Convergence

Abstract

The European Union (EU) and United States (US) are the world’s two largest and most influential legal jurisdictions for corporate mergers and acquisitions (M&A). The pressures of international economic competition have lead to a flurry of M & A activity in these locales in the post-Cold War period. Given the economic impact and, in many cases, political sensitivity of some M&As, it has become critical that transatlantic regulators reach similar decisions with regard to M&A approval, denial, or modification. Incongruent decisions lead to uncertainty in the marketplace, and the possible loss of global economic competitiveness and respect for regulatory processes and outcomes. In this paper, we explore the efforts made by the US and EU over the past two decades to enhance cooperation in merger policies and processes. We argue that, despite a couple of high-profile cases to the contrary, the US and EU have made great strides in reducing uncertainty in the M&A regulatory process by institutionalizing a series of formal agreements and working groups that have served to provide the foundation for a transatlantic merger environment that may serve as a model for cross-border regulatory cooperation in the twenty-first century.

Key words:

• Antitrust
• competition policy
• cooperation
• European Union
• interdependence
• merger
• regulation

Notes

1. For earlier examples of this comparative trend, see Fox (2007), Barnett (2006), Monti (2004, 2001a), Pate (2004), James (2001, 2002), Schaub (2002), Melamed (2000), Gerber (1999). Regarding the occasional disputes, for a recent case of disagreement see the 2009 Sun Oracle merger.

2. For a thorough analysis of the content of the Bilateral Agreement, see Ham (1993).

3. More detailed reports of the substantive issues of the merger and the divergent analyses taken by the EU and US can be found in Damro (2001), Boeder (2000), ICPAC (2000), Van Miert (2000), Karpel (1998), Peck (1998), Fox (1997) and Snyder (1997).

4. H.R. Res. 191, 105th Cong. (1997), 143 Cong. Record 5550 (1997); S. Res. 108, 105^th Cong. (1997), 143 Cong. Record 7609 (1997).

5. For the exact remedies, see Boeing (1997).

6. This is not to claim that the cooperative framework was perfected following the lessons learned from BMD. For example, the GE–Honeywell merger (2001) is often identified as a subsequent case in which cooperation was less than perfect (Morgan and McGuire 2004).

7. In 1998, the EU and US also signed a Positive Comity Agreement to clarify how positive comity should work in practice. Because domestic EU and US laws require competition regulators to initiate investigations into mergers that meet certain thresholds, the PCA does not apply to merger cases.

8. Indeed, the EU allowed US competition officials to attend EU oral hearings as observers in the BMD case.

9. However, reciprocal attendance does not guarantee convergent decisions. For example, see the 1999 BOC/Air Liquide merger.

10. For more on the MWG, see Damro (2011).

11. Commission Notice on remedies acceptable under Council Regulation (EEC) No 4064/89 and under Commission Regulation (EC) No 447/98, OJ C 68, 2.3.2001, pp. 3–11.