452 14 Excursion: Merger Control
known as as the principle of objective territoriality. An undertaking that does
business in the Community will have to comply with EU merger law.
This can be illustrated by the case of Gencor.^29 A South African company (Gencor Ltd) and
an English company (Lonrho Plc) proposed to acquire joint control of a South African
company (Impala Platinum Holdings Ltd, Implats). In the second stage, that South African
company (Implats) was to be granted sole control of two South African companies (Eastern
Platinum Ltd and Western Platinum Ltd, generally known under the name of Lonrho Plati-
num Division). In this case, the mining and production activities of the participating under-
takings were mainly located in Africa. According to the ECJ, the Merger Control Regula-
tion did not require that, in order for a concentration to be regarded as having a Community
dimension, the undertakings in question must be established in the Community or that the
production activities covered by the concentration must be carried out within Community
territory.^30 The ECJ said that neither the provisions of the EC Treaty nor those of the Mer-
ger Control Regulation excluded from the Regulation’s field of application “concentrations
which, while relating to mining and/or production activities outside the Community, have
the effect of creating or strengthening a dominant position as a result of which effective
competition in the common market is significantly impeded”.^31 The ECJ also said that Gen-
cor and Lonrho each carried out significant sales in the Community.^32 As a result, the pro-
posed transactions fell within the scope of EU merger law and was appraised under the EC
Merger Regulation.
The merger of Boeing and McDonnell Douglas was one of the first non-European merg-
ers considered by the Commission. The US Federal Trade Commission (FTC) had had ju-
risdiction over the merger and it had approved the merger without conditions on 1 July
1997 after a six-month investigation. The threat of a ban of the merger by the European
Commission under Community merger law was not perceived as credible at first. However,
had the companies proceeded without the approval of the European Commission, they
would have potentially faced large fines and potential harm to their customers. Had they
chosen to delay the merger, the resulting uncertainty would have potentially damaged their
customers, suppliers, employees, and shareholders. Boeing decided to bow to pressure. As
a condition of clearance by the Commission, Boeing agreed to certain conditions to address
Commission concerns regarding the merger (see below).
14.3 Complying with Community Law
The EC Merger Regulation applies to all concentrations with a Community di-
mension.^33 This raises many questions. What does a concentration mean? What do
the parties have to do when they are proposing a concentration? What concentra-
tions are compatible with Community law? What conditions can the Commission
require? What are the sanctions for non-compliance?
(^29) Case T-102/96 Gencor v Commission [1999] ECR II-753.
(^30) Case T-102/96 Gencor v Commission [1999] ECR II-753 paragraph 79. See also recital
10 of Regulation 139/2004 (EC Merger Regulation).
(^31) Case T-102/96 Gencor v Commission [1999] ECR II-753 paragraph 82.
(^32) Case T-102/96 Gencor v Commission [1999] ECR II-753 paragraph 85.
(^33) Article 1(1) of Regulation 139/2004 (EC Merger Regulation).