EU merger rules—minority shareholdings
EU merger rules—minority shareholdings

The following Competition practice note provides comprehensive and up to date legal information covering:

  • EU merger rules—minority shareholdings
  • Levels of shareholding leading to sole control
  • Voting patterns
  • Factors conferring extra influence
  • Joint control
  • Shareholders agreements
  • Veto rights
  • Financial protection
  • Voting arrangements
  • Common interests
  • More...

Except in the very rare case of a true merger (fusion) of two or more enterprises, such as Kyowa/Saitama Banks, a concentration occurs under the EU Merger Regulation (EU Merger Regulation) when there is an acquisition of control.

Control arises where rights, contracts or other factors 'confer the possibility of exercising decisive influence on an undertaking'. In most cases it is the rights attaching to shares in a company and therefore the ownership of those rights that is the significant, and often determining factor in deciding whether one company has acquired control over another within the meaning of the EU Merger Regulation (see A 'concentration' with an EU dimension).

The notion of control under the EU Merger Regulation includes, however, not only positive rights to determine a company’s strategy but also negative control through veto rights over such key matters as the strategic plan or budget. Minority shareholdings often confer such rights.

Secondly, the EU Merger Regulation specifically recognises the concept of joint control, where two or more undertakings together hold rights or own assets which confer control over another undertaking. This means that it is necessary to examine not only whether a minority shareholder has control, through decisive influence of the enterprise in which its shares are held, but also whether, together with one or more other minority shareholders, control is shared, or held jointly, so

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