Advocate General Kokott recommends that only a change of control leading to a full-function joint venture is subject to the EU Merger Regulation

• 02/05/2017
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On 27 April 2017, Advocate General (“AG”) Kokott delivered an important (albeit non-binding) opinion in the context of a preliminary reference request to the Court of Justice of the European Union (“ECJ”) from Austria’s Supreme Court seeking clarification as to whether a change of control of an existing business which is not “full-function” from sole to joint control is subject to the EU merger control regime. In her opinion, AG Kokott finds that the transfer of an existing business from sole control by one company to joint control by the self-same company and another company unrelated to it constitutes a ‘concentration’, and would thus be subject to the EU Merger Regulation, only where the joint venture resulting from that transaction performs on a lasting basis all of the functions of an autonomous economic entity. In other words, only a change of control resulting in an independent market-facing joint venture (i.e., a full-function joint venture) triggers an EU filing obligation.  In the words of the AG: “After all, if an establishment does not have an autonomous presence on the market, it follows that any change in the control structure of that establishment cannot have the effect of changing the structure of that market.”

The case is noteworthy as it is the first in which the ECJ has had to consider the meaning of the EU Merger Regulation in the context of a preliminary reference request from a national court.