Europe's M&A rules set for radical overhaul

Europe's M&A rules set for radical overhaul

By Francesco Guerrera and Birgit Jennen in Brussels

Published: October 20 2002 21:48 | Last Updated: October 20 2002 21:48



Europe's rules on mergers and acquisitions are to be changed radically to try

to defuse criticism, particularly from US corporations, that the system is

unfair.



Mario Monti, (pictured) European competition commissioner, wants to avoid the

potential for abuses and mistakes by officials in the European Commission's

powerful competition department. Several companies - led by General Electric,洛杉矶华人,

whose $43bn takeover of Honeywell was blocked last year - have attacked the

system for its lack of internal checks and balances to Brussels' powers.



No final decision has been taken on the reforms, which come after a year-long

consultation of companies, lawyers and national regulators. But officials say

a consensus has been reached on most of the main points.



Under the new system, the team of officials reviewing a merger will be

scrutinised by a "devil's advocate panel" of colleagues charged with checking

that correct theories and practices have been used. The competition department

will also appoint a chief economist in a move that will bring it closer to the

US, where economists play a key role in merger decisions.



Companies will also be able to request a "cooling off" period of about two

weeks during the five-month Brussels probe of their deals. The period is aimed

at finding ways of addressing regulators' concerns and avoiding a prohibition

of the merger.



But the Commission is believed to have abandoned plans to force national

regulators to hand over to Brussels all mergers that affect three or more EU

countries. The proposals were opposed by several member states, led by

Germany, which believe the current turnover thresholds are a better way of

allocating mergers between Brussels and national authorities.



The reforms, due to be unveiled next month, will stop short of some critics'

demands to have every merger decision approved by the European Court of

Justice.



However, Mr Monti is likely to call for speedier decisions by the court on

companies' appeals to the Commission's decisions.



News of the reforms comes as the Brussels regulator faces two judgments over

controversial vetoes of mergers in the Luxembourg-based court this week.



Brussels officials say a defeat in either case could trigger some changes in

the planned reforms.



In particular, the competition department is understood not to have decided on

a change to the key test to determine whether a merger should be blocked.







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