GCLC Lunch Talk Merger Control Substantive merger control: is the bar higher than it used to be and to what extent? John Davies, 16 September 2016

Is the bar higher? A view from the Madou trenches What are the new (ish) factors? Already consolidated markets getting more consolidated (more 4 to 3, 3 to 2, and No1 + No2 deals: Ball/Rexam; ABI/SAB) Most phase 2 cases since 2007 New(ish) Commission lexicon “close” competitors, not “closest” “role of (lack) of dominance” Elimination of an “important competitive force” (potentially relevant to all oligopoly markets?)

Is the bar higher? Incidence of large-scale document review and its implications Length of process (increase in “stop the clock” cases) Zimmer/Biomet has it all! Resource and cost explosion Approach to remedies Focus on viability rather than proportionality Growth of “up-front purchaser” and detailed purchaser requirements Focus on innovation concerns Growing of intensive international cooperation in complex cases (need for timing coordination) (Halliburton/Baker Hughes – US impact on EC thinking?)

Is the bar higher? In practice, all these factors contribute to make life harder… whether or not the “bar” is higher.

What does this mean for the parties? Expect a bruising, lengthy and costly process Do a realistic, thorough antitrust appraisal (“can we see the documents please?”) Look for clear and robust evidence. Be realistic on efficiencies Take great care over risk apportionment in transaction documents (remedy, strategy, divestment thresholds, growth of huge reverse break fees) Don’t believe your customers Have a thorough communication strategy closely linked to the antitrust team (beware the risk of political headwinds in some cases)

What does this mean for the parties? It’s never too early to plan remedies (and thoroughly) If Phase 1 clearance is important, don’t just “play at it” (Holcim/Lafarge, ABI/SABM) Understand what “negotiation” means in a regulatory context – its not like a commercial negotiator Don’t lose focus on why you are doing the deal (“nice to haves” may scupper the deal)

Thank you