Ex-post transaction review by antitrust authorities - one year after the Towercast judgment

On March 16, 2023, the Court of Justice of the European Union issued a landmark judgment in the Towercast case (C-449/21), which had significant implications for the future transactions. Typically, competition authorities examine only those transactions that require prior notification due to exceeding turnover thresholds. However, CJEU confirmed that authorities also have the ability to verify mergers that initially did not require prior notification. One year after the Towercast ruling, EU antitrust authorities have taken the opportunity to examine completed transactions.

In the following sections, you will find more detail about the implications of the Towercast judgment, how EU authorities have decided to use it and what are basic rules for notifying transactions to the President of the Office of Competition and Consumer Protection (UOKiK).

Towercast – ex post merger control

The case concerns the takeover of its competitor, Itas, by the television broadcaster TDF. The transaction did not require prior notification to the antitrust authority because Itas did not meet the turnover thresholds. TDF's competitor - Towercast - filed a complaint to the antitrust authority, claiming that authority should have carried out a proceedings. According to Towercast, TDF abused its dominant position by taking over a smaller competitor and thus strengthening its position in the market.

The case was referred to the CJEU, which ruled that national antitrust authorities can examine transactions for potential abuse of a dominant position, even if the transactions did not require prior notification. CJEU confirmed that antitrust authorities have additional tools against anti-competitive practices of the largest undertakings.

Belgian antitrust authority vs. Proximus – first case after Towercast

Following the Towercast judgment, the Belgian antitrust authority (BCA) initiated proceedings against Proximus. Proximus, as the largest Belgian telecommunications operator, decided to acquire EDPnet - a market competitor, among others, in fiber optic services. The transaction was initially approved by the Belgian court on March 21, 2023 (shortly after the Towercast judgment!). The takeover did not require BCA notification due to EDPnet's turnover being below the required threshold.

Nonetheless, BCA, based on the Towercast judgment, initiated proceedings against Proximus accusing the company of abusing its dominant position by acquiring one of its competitors. In addition, BCA imposed interim measures on the Proximus, preventing it from finalizing the transaction. Ultimately, Proximus decided to sell EDPnet to another, much smaller telecommunication operator - Citymesh.

The BCA has shown that it takes a decisive approach to the control of concentrations that do not meet the notification thresholds but may be problematic from a competition point of view.

Not only abuse of dominant position - French authority and Towercast judgment

The French antitrust authority (FCA) also decided to leverage the Towercast judgment by indirectly investigating the transaction that was not subject to notification. The case concerned the meat-cutting market, where in 2015 three undertakings - Akiolis, Saria and Verdannet - decided to conclude a series of agreements that resulted in five mergers. None of the mergers were subject to notification because the participants’ turnover was below the required threshold.

In 2019, the FCA initiated proceedings against the undertakings. Importantly, the authority investigated the potential anti-competitive agreements concluded between undertakings as part of transactions from previous years, where entrepreneurs allegedly divided the market geographically among themselves.

In 2024, the authority announced that it had ended the proceedings due to the lack of evidence for market sharing. However, the most significant aspect of this case is the authority's direct reference to the Towercast case. The FCA indicated that due to the Towercast judgment, it can examine transactions that were not subject to prior notification not only in terms of abuse of a dominant position, but also in terms of concluding anti-competitive agreements.

This represents a significant change, resulting in increased legal uncertainty in the context of planned transactions. It turns out that the antitrust authority may examine the concentration even after its closing, both in the context of the largest market players acquiring much smaller competitors (potential abuse of a dominant position) and also transactions concluded between non-dominant undertakings (potential conclusion of anti-competitive agreements).

The above examples demonstrate that competition authorities are keen to seize the opportunity to review the concentration that did not require prior notification. So far, transactions in the telecommunications and meat-cutting markets have been examined, but other sectors are also at risk. Especially sectors such as pharmaceuticals, technology and energy are particularly vulnerable to investigation, where the so-called killer acquisitions occur, i.e. transactions aimed at getting rid of a competitor.

Time for UOKiK?

The Polish competition authority - UOKiK - has not initiated any proceedings based on the Towercast judgment yet. However, national antitrust authorities actively exchange information on the latest proceedings and practices in all areas. Perhaps a similar case will arise in Polish jurisdiction in the near future?

Regardless of the authority’s potential to examine the transaction post-completion, the basic rules for notifying concentration remain applicable.

When does a concentration occur?

The concentration involves the acquisition of assets and liabilities of the undertaking/-s who participate in it. This means a permanent change in control over undertaking/-s. Concentration can take the form of:

• merger – a merger of two or more undertakings;
• takeover of an undertaking - i.e. obtaining actual control by purchasing shares etc.;
• joint venture – establishment of a joint venture by undertakings;
• acquisition by an undertaking of part of the property of another undertaking (whole or part of the company).

The obligation to notify depends on the turnover generated by the parties to the transaction. Transactions where the combined turnover of their participants in Poland exceeded the threshold of EUR 50 million or EUR 1 billion globally in any of the last two financial years, must be notified to the UOKiK. The law provides for a number of exceptions which further complicate the matter. For example there is a requirement to meet the threshold of EUR 10 million in Poland:

• by the acquired property,
• at least by one of the undertakings participating in the merger or forming a joint venture.

Gun jumping – fine for completing transactions before obtaining clearance

Failure to notify concentration to the authority despite meeting the turnover thresholds or finalizing it before the authority's clearance decision is issued (so-called gun jumping) may result in a fine. UOKiK may take action to restore the state of competition before the transaction, e.g. by ordering the undertaking to divide or resell part of the shares. In addition, fines of up to 10% turnover may be imposed on undertakings that were required to notify the transaction.