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European Union: Joint Ventures

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An extract from The European, Middle Eastern and African Antitrust Review 2017 -

This article reviews the application of EU merger control rules to joint ventures (JVs) including recent developments. It also looks at recent developments in the application of article 101 of the Treaty on the Functioning of the European Union (TFEU) to JVs, in particular, recent judgments of the European courts regarding parental liability for cartel infringements by JVs.

The EU Merger Regulation (EUMR) applies to the creation of any JV which is considered to be ‘concentrative’ rather than ‘cooperative’. Concentrative JVs are those that are structured in such a way as to meet three key criteria: joint control: two or more undertakings are in a position to exert decisive influence over the JV; full functionality: the JV will perform all of the normal sort of activities carried out by an autonomous economic entity, on a lasting basis; and EU dimension: two or more undertakings have sufficient revenues in the EU to meet one of the two sets of EUMR filing thresholds. If each of these three criteria are met and the Parties meet the global revenue thresholds, then a JV will be subject to an EUMR notification.

In addition to the potential application of EU merger control rules to the formation of a JV or changes in its structure, the general competition rules set out in article 101 (prohibition of anticompeti¬tive agreements) and article 102 (abuse of a dominant position) can apply to a range of aspects of formation of a JV company and its subsequent conduct on the market (see also above in relation to substantive assessment under the EUMR). This article also discusses recent developments in article 101 case law that have wide-ranging implications for parent companies of JVs.

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