Antitrust Alert: EC Merger Decision Highlights Risks of Possibly Broad Divestiture Requirements

Imposing a broad remedy to address competition issues, the European Commission cleared Unilever's acquisition of Sara Lee's household and body care business on 17 November 2010. This merger decision is a reminder that the EC has the power to seek a remedy from merging parties that goes further than might appear strictly necessary and further than expected. In some cases, the imposition of broad remedies may materially undermine the rational and value of the deal and also delay the deal and impose additional costs.

Remedies in EU Merger Control

As in most merger control regimes, in the European Union transactions are presumptively legal but subject to review by the competition authority. For transactions involving parties with significant turnover in the EU, the relevant authority is the European Commission. If the EC finds that the merger creates substantive problems in the structure of competition in the relevant markets, it can prohibit the transaction from