EC: Certain US Companies Can't Merge Without EU Approval

An official spokesperson for the European Commission, in response to our questions regarding procedures for reviewing the proposed merger between Google and DoubleClick, told BetaNews this morning that under EU law, any two companies anywhere in the world whose projected post-merger annual revenue from European customers would exceed 250 million euros is subject to regulatory approval there.

While declining specific comment on these two companies, EC press officer for competition policy Linda Cain wrote to BetaNews, "In general terms, under the EU Merger Regulation, proposed mergers must be notified to the European Commission if the annual turnover of the combined businesses exceeds specified thresholds in terms of global and European sales (5 billion euros annual global combined turnover, each party having at least 250 million euros annual turnover in Europe). All proposed mergers notified to the Commission are examined to see if they would significantly impede effective competition in the EU."

Cain directed us to a Web page explaining EU merger policy in further detail. Below the revenue threshold she indicated, all proposed mergers may be reviewed by EU member states at their discretion. The page, entitled "Mergers: Overview," defines mergers as "companies combining forces," without any reference to their native geography.

Though the Web page certainly cannot be interpreted as law, it does put forth another important threshold that may inevitably work against Google and DoubleClick: "All proposed mergers notified to the Commission are examined to see if they would significantly impede effective competition in the EU," the page reads. "If they do not, they are approved unconditionally. If they do, and no commitments aimed at removing the impediment are proposed by the merging firms, they must be prohibited to protect businesses and consumers from higher prices or a more limited choice of goods or services. Proposed mergers may be prohibited, for example, if the merging parties are major competitors or if the merger would otherwise significantly weaken effective competition in the market, in particular by creating or strengthening a dominant player. However, not all mergers which significantly impede competition are prohibited." [emphasis ours]

Almost by definition, any corporation - especially a retail business, but certainly also an advertising firm - that conducts a share of its business over the Internet is a global concern that can be considered as having European customers. Thus it would appear that future mergers of this kind anywhere in the world may find themselves bound by European regulatory review, which in this case adopts a much narrower standard for approval (avoiding "dominance") than US law.

Here is where comScore's August search rankings, giving Google more than half the US search market, may not bode all that well for the company after all.

Cain also stated the EC's self-imposed deadline for a decision on this matter is October 26, implying that deadline would not be extended.