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State Aid Law Implications in Merger Control

Alexandros Stratakis Van Bael &

Bellis 2 June

2007

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ECJ’s Matra Judgment Antitrust and State Aid rules must be applied consistently

(Matra doctrine)

CFI’s RJB Mining JudgmentTurning Matra doctrine “on its head”

CFI’s BaByliss JudgmentLimiting RJB Mining?

European Courts Case Law

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Metronet/Infraco

HDW/Ferrostaal/Hellenic Shipyard & ThyssenKrupp/HDW

Deutsche Post /DHL(II) & Deutsche Post/Exel

Iberdrola/Scottishpower

Commission Practice post-RJB Mining

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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”?

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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

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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?

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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?

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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

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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