The Notice on Remedies (2008) acknowledges that the Commission shall not impose unilaterally conditions on the clearance of a merger. The parties shall offer the commitments to the Commission (EDP v Commission). The Commission tests the commitments submitted by taking them to the market, transparency must be maintained and Member States and interested third parties should be consulted.
In practice, a structural solution might be preferable since the commitment may prevent significant impediment to effective competition and it does not require monitoring measures (Praxair/Linde). In AB InBev/SAB Miller (2016), the Commission stated that the most effective means of restoring effective competition is through divestiture of a subsidiary or production facilities and the creation of a new competitive entity or the strengthening of existing competitors. Divestitures might also be used to remove links between the parties and competitors where these links contribute to competitive concerns raised by the merger (Time Warner/AOL (2000)).
Divested activities must consist of a viable business that, if operated by a suitable purchaser, can compete effectively with the merged entity on a lasting basis. There is skepticism about the divestiture of assets such as brands that have not been a uniform and viable business in the past.
The business must be transferred to a suitable purchaser, meaning a purchaser who is independent of the parties, who has the financial resources, expertise, incentive, and ability to maintain and develop the divested business, and who will be in a position to acquire the business without regulatory problems.
Competition authorities may require the business to be divested within a fixed time after the conditional decision, or to identify an “up-front” buyer before the transaction can be completed, or accept a “fix-it-first” solution where a specific purchaser is identified during the investigation itself and the parties enter into a legally-binding agreement to sell. A behavioural solution might be difficult to control and enforce. In GE/Honeywell (2001) the parties offered commitments to abstain from certain commercial behaviour to deal with the Commission’s concerns.
Access remedies and change of long-term exclusive contracts might also be accepted as remedies. Commitments giving access to infrastructure or key technology might open the market to competitors. Enforcement authorities might exceptionally modify or waive commitments attached to a clearance decision or charge a company for breaching a commitment.
Monitoring or divestiture trustees roles are, among others, to ensure that the business to be divested is not degraded during the interim period; to monitor the splitting of assets and the allocation of personnel between the divested and retained businesses; to oversee the parties’ efforts to find a potential purchaser and to transfer the business; to report on these issues to the authority in periodic compliance reports.
Remedy-setting sometimes involves extensive cooperation between competition authorities in various jurisdictions, which might include the signing of a Memorandum of Understanding between the respective authorities.
Sometimes no remedy may be adequate to deal with the adverse effects identified or may be so complex that the competition authority cannot determine with the required degree of certainty that effective competition will be restored.