EU Court Decides EU Merger Control Can Only Catch Joint Control Transactions If The Resulting Entity Is ‘Full-Function'

On September 7, 2017, the European Court of Justice (ECJ) decided that, where joint control is acquired over a new or existing undertaking (or parts of an undertaking), that transaction can only fall within the scope of the EU Merger Regulation (EUMR) where the resulting entity will be 'full-function.'

Under the current approach to 'full-functionality' this has significant negative implications for the certainty, timeliness and efficacy of the competition law treatment of joint ventures in the EU.

Joint Ventures Under EU Competition Law

The term 'joint venture' can be used to describe a very wide range of commercial arrangements. Joint ventures of all types are very common between competitors. They can allow sharing of costs, removal of overcapacity, sharing of risks on R&D projects, etc. The structures chosen can range from full mergers of complete businesses, through to looser contractual arrangements on joint R&D, production or distribution efforts.