“The competition system here is more emulated than anywhere else in the world,” cooed William Rowley QC, Chair of the International Bar Association (IBA) conference on merger control. In his welcome to Competition Commissioner Mario Monti, Allen & Overy partner Michael Reynolds insisted that the European Commission's (EC) hammer-blow defeats before the Court of First Instance (CFI) must be considered “with a sense of proportion and in the proper context”.
The EC Merger Control Conference held at the Conrad Hotel in Brussels may have been organised by the IBA, but this was an EC conference and a chance for the beleaguered body to lick its wounds in the wake of Airtours et al. Following leaked comments in the press from EC officials that there is something “rotten” at the regulator, it also offered an opportunity for Monti and his team to present a more united front. Given the unprecedented flak DG Competition has taken, the conference – long planned to discuss the Competition Green Paper – fell kindly to allow the EC to put forward its side of the story.
First up, Monti sounded slightly taken aback by the extravagance of the praise from the IBA, but it no doubt felt like a homecoming after the baying press pack he faced following the ruling on Tetra-Laval Sidel. For those short on time, the IBA conference pack should have suggested that if you heard Monti's speech, you could probably skip the rest of the two-day conference, because it was so detailed it made some of the following sessions academic.
Monti sketched in the detail to many of the plans hastily announced following the Tetra defeat, but it was his tone and attitude as much as any individual reform that impressed. He told the packed room: “I believe that, in a certain time, with more hindsight, we will say that these judgments, no matter how painful, came at the right moment. Indeed, there are lessons to be drawn from the judgments”
However, he sent out a warning note to those who thought the EC would go soft: “Let me reassure you that, if the EC reaches the conclusion that a merger is likely to give rise to serious competition concerns, it has a duty to intervene and will continue to do so.” The response from competition lawyers, particularly the tiny and incestuous Brussels-based community, was positive. Linklaters partner Alec Burnside said: “It's up to us to support and help the EC, which has generally done lots of good work.” His views were echoed by many at the conference.
Burnside, a ubiquitous Brussels presence, incidentally provided the biggest laugh of the conference. Responding to a question from the floor from Burnside, the president of the CFI Bo Vesterdorf said that, although he knew most of the people in the room, he could not identify the questioner at the back. Peels of laughter rang around the ballroom as Burnside identified himself.
Monti took the opportunity to publicly express his support for the head of the Merger Task Force (MTF) Gotz Drauz, who lost out on a predicted promotion to the deputy director-general of DG Competition in what some interpreted as human sacrifice to the vagaries of political fortune. Although some at the conference still predict Drauz will leave the MTF, insiders said he will bide his time under the new director-general Philip Lowe, himself considered to be a key factor in the future performance of the MTF. Slaughter and May partner Philippe Chappatte said: “Some of the procedural reforms announced will have no real impact. What really matters is personalities and Lowe is the right man for the job. He'll be much better than [previous director-general] Alex Schaub.”
Several of the proposals on the timeframe for merger investigations were new. The planned introduction of a pre-merger notification process was well received, with Jones Day partner Greg Olsen saying the move was a step forward. However, Slaughters partner Bertrand Louveaux cautioned that although useful, it would be applied to private rather than public deals.
Monti also announced the addition of an extra three weeks to the phase two investigation period to allow a better consideration of remedies by the EC member states and companies. Furthermore, an extra four weeks will be available at phase two in very complex cases, where either the EC or the company requests it.
Despite rumours of internecine strife between the EU institutions, representatives of the European Parliament and the CFI were wheeled in to express their views. Vesterdorf was cautious about the future role of the court, following Monti's comment that “for all practical purposes it has become a specialised competition court”. Vesterdorf said: “This is no longer just a competition court,” and cautioned that he doubted whether the court could speed up review of merger control cases.
But there was much common ground in that what Vesterdorf really wants is resources. Monti expressed support: “To the extent that the EC can assist, I'm ready to strongly advocate for the additional resources that would no doubt be required by the CFI.”
After the main course of Monti and Vesterdorf, the EC's two new hearing officers got a chance to talk about what they have been doing since their roles were created last year. The consensus among Brussels lawyers is that so far they have made little impact, but the two officers – Karen Williams and Serge Durande – were at pains to stress their independence from the case teams and, therefore, their value. Williams pointed out that the hearing officer was a key safeguard during the oral hearing, but bemoaned that “the reluctance of the parties to request an oral hearing”.
Many lawyers feel that the oral hearing merely offers ammunition to opponents of the merger, but there is no doubt that hearing officers sincerely want to make their roles work. At the post-conference reception at the Cercle Royal Gaulois, Williams was seen berating one of the very lawyers who turned down an oral hearing in his high-profile merger.
Monti was not taking questions at the conference, but one of the key questions he must eventually answer is whether or not there is the political will to provide his directorate with more resources. Just throwing money at something is never an answer, but Monti, his officials and competition lawyers have bemoaned the lack of resources for years.
In his speech, Monti revealed that the Hotel Conrad was where Jacques Chirac and Gerhard Schroeder sewed up the Franco-German deal on the Common Agricultural Policy (CAP) a fortnight ago. Despite its profile, competition enforcement is an EU minnow next to issues such as CAP and enlargement. How much money is really left over for it?