Ex post review of non-notifiable M&A deals: The Belgian Competition Authority takes action in the wake of the Towercast judgment

edpnet is a fixed internet provider on the Belgian market. It was recently involved in a judicial reorganisation procedure after falling into financial difficulties. On 21 March 2023, in the context of this procedure, the Ghent Enterprise Court ordered the transfer of edpnet's activities to Proximus, who, in addition to Orange and CityMesh, had offered to take over edpnet before the Court.

Given that the turnover of edpnet was not sufficient to exceed the Belgian merger control turnover thresholds, the transaction is not subject to ex ante BCA merger control approval. However, this did not stop the Prosecutor General (the head of the BCA’s Investigation and Prosecution Service) from opening an ex officio investigation under the abuse of dominance rules after indications that the takeover of edpnet by Proximus would result in substantial obstacles to competition.

In doing so, the BCA is giving practical effect to the recent Towercast judgment of the European Court of Justice (the ECJ).² In this judgment, the ECJ ruled that a concentration that does not meet the mandatory ex ante merger control thresholds under EU and national law (and which has not been referred to the European Commission under article 22 of the EU Merger Regulation (the EUMR)) may be analysed by national competition authorities and the courts of EU Member States as a potential abuse of a dominant position under article 102 of the Treaty of the Functioning of the European Union (the TFEU). The relevant test is whether a dominant undertaking substantially impedes competition on the market on which it is dominant by acquiring another undertaking.  

This ruling is significant as it means that a dominant undertaking cannot rule out antitrust intervention when acquiring another undertaking, even after establishing that the European Commission and national antitrust authorities in the EU do not have jurisdiction to review their transaction under merger control rules. The risk of intervention remains even after the deal completes, and also applies to transactions preceding the ECJ’s ruling.

The BCA seems to be the first national competition authority to have taken action following the ECJ’s ruling. This step suggests that article 102 of the TFEU may become an important tool in closing the perceived enforcement gap in anticompetitive acquisitions.

Interestingly, the BCA has previously been reluctant to investigate non-notifiable transactions from an abuse of dominance perspective. Indeed, in 2017 the Competition College of the BCA rejected the interim measures requested by the Belgian brewery, Alken-Maes, against the non-notifiable acquisition of Brouwerij Bosteels by AB InBev.³ Alken-Maes was seeking to suspend the integration of Brouwerij Bosteels in the AB InBev group based on the argument that this acquisition constituted a prima facie abuse of AB InBev’s dominant position.  The BCA emphasised in its decision that a concentration is in principle a legitimate transaction (unless the authority can prove that there are sufficient grounds to show otherwise), which in principle must be reviewed within the merger control framework as this would otherwise lead to uncertainty for the merging entities: it decided that it could therefore only impose interim measures if there were restrictions of competition that could be distinguished from the mere effect of the concentration, and that themselves prima facie qualify as an infringement of the Belgian provisions prohibiting an abuse of a dominant position.  The Market Court of the Brussels Court of Appeal confirmed the BCA decision and rejected Alken-Maes’ appeal.⁴

The BCA’s immediate reaction following the Towercast judgment is not entirely unexpected, as the BCA had highlighted in its 2022 priority note⁵ that it intends to play a more active role in European and international policy debates and increase its capacity for ex officio investigations.

Footnotes

_{1. BCA press release 10/2023 dated 22 March 2023, “The Belgian Competition Authority opens an ex officio investigation into a possible abuse of dominance by Proximus in the context of the takeover of edpnet, in application of the Towercast case law”
2. Judgment dated 16 March 2023, Towercast, C-449/21, EU:C:2023:207
3. Decision BMA-2016-V/M-36 of the BCA’s Competition College dated 21 November 2016, Brouwerij Bosteels
4. Judgment 2016/MR/2 of the Market Court of the Brussels Court of Appeal of 28 June 2017, Brouwerij Bosteels
5. The BCA’s priority note for 2022, 12 May 2022 (in Dutch).}