National Champions and the Two-Thirds Rule in EC Merger Control

Abstract

The 'two-thirds rule' stands as a caveat to the quantitative jurisdictional thresholds stipulated in the Merger Regulations. It prevents the attribution of a 'Community dimension' to large business mergers where two-thirds of the parties' respective turnovers are made in one and the same member state. It sees the relevant national authority and not the European Commission enjoy competence to assess the competitive effects of such a transaction. In the immediate aftermath of Gas Natural/Endesa - a case which the European Commission accepted only reluctantly did not possess a Community dimension - the Competition Commissioner mooted the legislative repeal of the two-thirds rule. The reception by member states of a proposal on these lines is unlikely to be uniformly generous. This note first reviews the origins and content of the two-thirds rule, before proceeding to consider the current momentum behind and prospects for successful reform. It suggested that a wider rapprochement between divergent perspectives on the best approach to achieving economic development both within and across the member states of the EC - and in particular on the problematic issue of support for 'national champions' - will likely be necessary before any revision can occur.

Keywords: EC law, mergers, jurisdiction, industrial policy, national champions

JEL Classification: K21