ECJ’s Towercast decision: new ex post control of business combinations

  • 04/28/2023
  • Reading time 4 Minutes

Mergers and acquisitions can now also be subject to ex post antitrust control.

In its “Towercast” decision of March 16, 2023, the ECJ ruled that, in addition to the previous ex ante control under merger control law, business combinations may also be subject to ex post control, based on the prohibited abuse of a dominant position under antitrust law, provided that the thresholds under merger control law were not exceeded and the mergers were therefore not subject to notification requirements.

This is due to a legal dispute between Towercast SASU and the French competition authority. After Télédiffusion de France (“TDF”) had acquired its competitor Itas, Towercast was the only remaining competitor on the French market for terrestrial digital television transmission services. However, since the TDF/Itas merger had neither exceeded national nor European thresholds for an application of the merger control provisions, it was not notifiable to the European Commission or the national antitrust authorities. 

This was challenged by Towercast before the Autorité de la concurrence, the French competition authority, on the grounds that the acquisition constituted an abuse of a dominant position on the part of TDF, as it impeded competition on the upstream and downstream wholesale markets for the transmission of DVB-T by significantly strengthening TDF’s dominant position on these markets.

Since the French antitrust authority did not consider any abusive conduct by TDF to be proven and justified this above all with a strict separation of the application of merger and abuse control, the proceedings ultimately ended by referring the question to the ECJ. The core of this question was whether mergers not exceeding the thresholds under merger control law and therefore not being subject to ex ante notification can be subjected to an ex post review in order to determine whether they constitute an abuse of a dominant position.

The ECJ’s decision

The ECJ affirmed the applicability of antitrust abuse control to such business combinations, in particular for systematic reasons.

Even if business combinations were subject to ex ante notification requirements only if they exceeded national or European thresholds, this did not render any ex post abuse control inapplicable per se. The application of the prohibition of abuse under primary law in Art. 102 TFEU could not be blocked by (inapplicable) secondary law of the European Merger Regulation (ECMR). Furthermore, the application of abuse control in such cases would also be in line with the purpose of protecting the internal market against distortions of competition, without any time restriction.

Finally, possible abuse control in the case of mergers is also intended to protect competition from so-called “killer acquisitions”, i.e., constellations in which established companies (often market leaders) acquire new (usually young) companies on the market in order to eliminate them in advance as potential later competitors, thus consolidating their own position on the market.

What the decision means for practice

As a result of the ECJ's decision, companies must have another aspect in mind or on their checklist when planning transactions. In the future, companies must not only check whether an acquisition exceeds the European and national thresholds for an application of merger control provisions. Rather, transactions falling (significantly) below these thresholds must also be examined in order to determine whether they could possibly qualify as an abuse of a dominant position pursuant to Art. 102 TFEU.

Since such provision is not subject to any time limit, legal certainty for companies is significantly reduced. This also applies to transactions already concluded in the past, to the extent these might have had a significant impact on the market structure. In such cases, companies are not only threatened with the imposition of fines but might even be obliged to perform a demerger. 

The first consequences of the ECJ’s decision are already becoming apparent. The Belgian anti-trust authority has ordered the investigation of a below-threshold acquisition in line with the new case law. Companies should therefore definitely keep an eye on the practice of the antitrust authorities and courts.

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Author of this article

Oliver Köster, LL.M.


Attorney-at-Law (Rechtsanwalt)

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