An article based on Iiris Tuohimaa's award-winning thesis has been published in Europarättslig tidskrift

This news below can be read in Finnish here.

An article regarding the SIEC test [1] by Iiris Tuohimaa, who joined us as an Associate Lawyer at the beginning of September, has been published in the Swedish journal Europarättslig tidskrift. The article is based on Tuohimaa's award-winning thesis on merger control at Lund University.

The SIEC test is used by the European Commission to assess mergers, according to which a merger only passes the Commission's scrutiny if it does not significantly impede effective competition in the EU's internal market. If a merger significantly impedes effective competition in the market, for example by creating a dominant position, the Commission can prohibit the merger, order its termination, or impose conditions on its implementation.

However, in oligopolistic markets characterised by only a few players, the merger may not lead to the creation or strengthening of a dominant position, but the SIEC test nevertheless requires the Commission to carry out demanding legal and economic assessments to analyse its impact on competition. In recent years, the Commission has been criticized for its arbitrary application of the SIEC test, which has created uncertainty for parties involved as to whether the merger will raise potential competition concerns.

The CK Telecoms decision

In her article, Iiris Tuohimaa analyses the SIEC test and its application through case law. The article critically examines the CK Telecoms judgment (Case T-399/16) of the General Court of the European Union (General Court) concerning a proposed merger in the UK telecoms sector. Tuohimaa analyses the Court's approach to the SIEC test from a legal and economic perspective. The CK Telecoms judgment of 2020 was the first time, since the introduction of the SIEC test in 2004, that the General Court clarified the criteria used in the SIEC test.

In particular, the Court analysed unilateral effects in oligopoly cases, which refer to the ability of companies to raise prices post-merger due to the removal of competitive constraints resulting from the merger. According to Tuohimaa, the General Court significantly raised the bar for the Commission before it can prohibit a merger in an oligopolistic market, thus setting much-needed limits to the Commission's arbitrary application and substantive assessment of the SIEC test. On the other hand, Tuohimaa considers that the General Court further increased the legal and economic uncertainty surrounding the SIEC test, as in its judgment it reasoned the legal issues inconsistently and examined the economic evidence in a controversial manner.

The Commission appealed the ruling to the Court of Justice of the European Union (CJEU) and shortly after Tuohimaa’s article was written, the CJEU issued its long-awaited ruling (Case C-376/20 P). In its ruling, the CJEU annulled the General Court's ruling and referred the case back to it for reconsideration. The CJEU's ruling has largely confirmed the Commission's wide discretion to assess mergers in concentrated markets that do not create a dominant position. The ruling is a major victory for the Commission and can be seen as supporting a more interventionist approach to merger control.

However, the CJEU's solution is not ideal for companies considering a potential merger, particularly those operating in oligopolistic markets. In the future, companies will have to carry out a thorough legal and economic assessment when looking for opportunities for expansion or acquisitions. It remains to be seen how far-reaching the legal implications of the CK Telecoms decision will be for merger control.

Read Iiris Tuohimaa's full article "EU merger control at a crossroads – CK Telecoms as an Opportunity to Clarify the SIEC Test of Unilateral Effects" in full here.

[1] SIEC = "Significant Impediment to Effective Competition"