Below-Threshold Transactions and Notifications in Europe: If Not the Commission Then the Member States?

On January 22, 2025, the Belgian Competition Authority (BCA) applied, for a second time, the Towercast judgement (C-449/21) from the EU Court of Justice to review ex officio a below-threshold merger - Dossche Mills’ acquisition of rival flour producer Ceres. A mere week after the parties announced the transaction, the BCA indicated it would review the transaction under Article 101 TFEU even though the acquisition did not meet the Belgian thresholds for a notification. This is novel as the BCA only previously applied the Towercast judgement in the context of a possible breach of Article 102 TFEU.

The growing trend of investigations of below threshold mergers.

What did the Court of Justice rule in the Towercast judgement?

In Towercast the Court ruled that national competition authorities can apply their antitrust tools to assess the impact of non-reportable concentrations, even after the closing of such transactions. In the present case the BCA was prompt to intervene after the announcement of the transaction and before closing of the transaction. The BCA was the first national competition authority to ever rely on the Towercast judgement to investigate a concentration which does not meet the national ex ante mandatory notification thresholds. A mere week after the Court of Justice rendered its judgement, the BCA snatched the opportunity to apply it to the Proximus/EDPnet case and to review the transaction under Article 102 TFEU. After interim measures imposed by the BCA, Proximus ultimately divested EDPnet which led the BCA to close its investigation.

In the current case, the BCA is relying on Article 101 TFEU to review the transaction.

Why is the Belgian Competition Authority scrutinizing this transaction?

Although the transaction did not meet the Belgian merger control notification thresholds, the BCA nonetheless decided to initiate a formal investigation into this transaction due to the fact that Dossche Mills and Ceres are the two largest producers and suppliers of flour to artisan bakeries in Belgium.

Moreover, the current proposed transaction is somewhat of a rerun for Dossche Mills and Ceres. In 2019, Dossche Mills already tried to acquire Ceres. At that time the transaction was caught by the national merger notification thresholds and investigated by the BCA which found that the transaction raised serious doubts about its compatibility with the protection of effective competition. Consequently, Dossche Mills and Ceres abandoned that transaction. It appears that this would-be acquisition never left their mind. While the present iteration of this transaction has a smaller scope through removing certain business segments of Ceres, allowing it to escape the Belgian notification thresholds, the BCA clearly did not forget its concerns from 2019.

But the recollection of the BCA goes further back in time. It recalls that Dossche Mills and Ceres, in 2013, infringed Article 101 TFEU in the form of anti-competitive horizontal agreements and exchanges of sensitive commercial information leading both companies to be fined by the BCA. Might this be the reason why the BCA based itself on Article 101 TFEU? The BCA could consider that the industry is prompt to coordination and therefore believe it might be more effective to review this transaction under the lens of Article 101 TFEU rather than Article 102 TFEU. Time will tell.

A European Union trend in the making?

The question of below threshold investigation is a very timely one. All this ties in with the recent judgement from the Court of Justice in the Illumina/Grail case from September 2024 (C‑611/22 P and C‑625/22 P) which now prevents national competition authorities from referring transactions that do not meet national merger control thresholds to the European Commission. This has prompted many Member States to adopt modifications to their merger control legislation granting them call-in powers, to investigate transactions that do not fall within the usual merger control thresholds. Consequently, a number of Member States now have call-in powers, including Cyprus, Denmark, Hungary, Ireland, Italy, Latvia, Lithuania, Slovenia and Sweden.

For countries such as Belgium which do not yet have call-in powers, they still have the ability, thanks to the Towercast judgement, to review non-reportable below threshold transactions under the scope of Article 101 and 102 TFEU. Notably, the BCA was not the first national competition authority in Europe to investigate a transaction based on Article 101 TFEU as the meat-cutting investigation initiated by the French competition authority in 2024 was also based on Article 101 TFEU. However, the French authority concluded the case without finding an infringement of Article 101 TFEU.

Member States that do not have call-in powers are currently reviewing if and how they should adopt legislation granting them such powers. The French Competition Authority recently published its public consultation on the introduction of a merger control framework for addressing below-threshold mergers likely to harm competition. In Belgium, the BCA president also advocated for an introduction of call-in powers for the authority.

National competition authorities are requesting their legislators to add these call-in powers in order to have a quicker and more efficient way to address below notification threshold mergers and to create more legal certainty. Following the Court of Justice Towercast judgement, national authorities are capable of addressing below notification threshold mergers under Article 101 and 102 TFEU. This however is a more lengthy and unpredictable process. On the contrary, call-in powers would allow for a swifter procedure, with clearer criteria and clearer prospects on timing of the decision. In turn, this would create more certainty for companies as opposed to investigations under Article 101 and 102 TFEU.

This memorandum is a summary for general information and discussion only and may be considered an advertisement for certain purposes. It is not a full analysis of the matters presented, may not be relied upon as legal advice, and does not purport to represent the views of our clients or the Firm. Riccardo Celli, an O’Melveny partner licensed to practice law in the Brussels-Capital Region, England & Wales, and Rome; Philippe Nouges, an O’Melveny counsel licensed to practice law in the Brussels-Capital Region and Paris; and Mateusz Rys, an O’Melveny law clerk, contributed to the content of this newsletter. The views expressed in this newsletter are the views of the authors except as otherwise noted.