Are You Concentrating? A Guide To The Merger Regulation For Outsourcing Lawyers

Author:Mr Mark Henley
Profession:Kemp Little LLP
 
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Until recently, competition law issues in outsourcing

projects were very much on the periphery. That may no longer be

the case as the European Commission now tells us that the EU

Merger Regulation can apply to outsourcing deals. In this

article Julia Jones and Mark Henley look at what outsourcing

lawyers need to know about the Merger Regulation and when they

should consult with their competition colleagues.

Competition Law and Outsourcing

Transactions

Until recently competition lawyers have had only a marginal

part to play when considering outsourcing transactions. Some

advice may have been needed on exclusivity arrangements and on

the impact of Article 81 (concerning agreements which restrict

competition) but besides these areas there has been little to

worry about. However, all this seems about to change. Always

with an eye for a snappy and memorable title, the European

Commission issued "Commission Consolidated Jurisdictional

Notice under Council Regulation (EC) No. 139/2004 on the

control of concentrations between

undertakings1" (the "Notice") which

states that the Merger Regulation2 can apply to

outsourcing deals.

Mergers are regulated by competition law because they can

impede effective competition. Whilst Article 82 of the Treaty

establishing the European Community is concerned with

preventing the abuse of a dominant position, the Merger

Regulation is intended to prevent competition from being

restricted in the first place.

Under the Merger Regulation the Commission can examine

significant multi-jurisdictional mergers, acquisitions and

joint ventures and oppose them if they are incompatible with

the common market. If the various criteria set out in the

Merger Regulation are fulfilled then the parties to the

affected transaction will be obliged to notify the Commissions

Competition Directorate General for approval prior to

implementation. The Notice now makes clear the Commissions view

that in some situations this could apply to outsourcing

transactions too.

Community Dimension

The Merger Regulation sets out various highly complex

turnover tests designed to assess whether the transaction will

be significant enough to have an impact on the Community

(whether it has a "community dimension"). The details

of these tests are beyond the scope of this article but it is

worth remembering too even if a transaction is deemed not to

have a "community dimension" it may still be examined

by national competition authorities. In the UK, for example,

...

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