The EU merger control regime is highly respected worldwide, and rightfully so. The European Commission ("Commission") has, over the past 20 years, delivered rigorous yet efficient review in a transparent and pragmatic manner. However, there are some specific areas that are in need of reform.
This paper focuses on the area that is, in our view, the most obvious candidate for reform; the unjustifiable obligation to notify extraterritorial joint ventures ("JVs"). No business should object to Commission scrutiny of concentrations that could have an impact on competition within the EEA. However, where a concentration does not, and indeed cannot, have any effect on competition in the EEA, an obligation to notify the Commission is objectionable as a matter of principle and, given the costs involved, undesirable as a matter of economic efficiency.
In this paper we: 1) consider how existing rules can require notification of extraterritorial JVs; 2) demonstrate how these rules have led to absurd results in practice; 3) explain why the status quo is unsatisfactory on policy and practical grounds; and 4) put forward our view as to how existing rules and practices can be revised to eradicate this anomaly.
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