Earlier this summer, in RWE/E.ON, the EU’s Court of Justice (CJEU) clarified the boundaries between merger control and antitrust enforcement, essentially holding that concerns relating to the EU’s cartel prohibition (Art. 101 TFEU) cannot be assessed as part of a merger control proceeding. But then last week, the European Commission approved Naspers’ acquisition of Just Eat Takeaway.com (JET) only subject to conditions addressing concerns about Naspers’ minority stake in Delivery Hero, a competitor of JET.
These two decisions raise a fundamental question: Can minority shareholdings in competitors be assessed under merger control, or do they require separate scrutiny under Art. 101 TFEU? Or more provocatively: Is the Commission’s approach in Naspers/JET at odds with the CJEU’s findings in RWE/E.ON?
RWE/E.ON: Structural concentration, not behavioural coordination
The RWE/E.ON transaction involved a rather complex asset swap: RWE acquired E.ON’s renewable and nuclear generation assets, while E.ON took over RWE’s retail and distribution business. RWE also acquired a 16.67% minority stake in E.ON. The Commission reviewed and cleared the main parts of the deal, while the acquisition of the minority stake in E.ON was reviewed and cleared by the German Federal Cartel Office.
The Commission’s clearance was appealed by public sector companies active in the energy space. The appellants argued that the deal amounted to a market-sharing agreement and a “cease-fire” between “former fierce competitors”. However, the CJEU held that the transaction was a concentration under the EU’s merger control rules, and thus exclusively subject to merger control. The cartel prohibition of Art. 101 TFEU could apply if the transaction did not qualify as a concentration or involved coordination between independent undertakings. The court emphasized that behavioural concerns must be addressed through separate antitrust proceedings and not within the structural framework of merger control.
Naspers/JET: Minority shareholding as a merger control risk
In contrast, the Commission’s decision in Naspers/JET focused on the competitive implications of a pre-existing minority shareholding. Naspers indirectly held a 27.4% stake in Delivery Hero, a competitor of JET in five EU Member States.
Although this minority stake was not part of the notified transaction, the Commission found that it created a structural link that could:
- Reduce JET’s incentives to compete with Delivery Hero;
- Increase the likelihood of tacit coordination; and
- Lead to higher prices or market exits.
To resolve these concerns and win clearance in Phase 1, Naspers committed to reduce its stake in Delivery Hero to “a very low percentage”, waive voting rights, and refrain from board appointments.
Are the two approaches at odds?
At first glance, the Commission’s scrutiny of Naspers’ minority stake seems to contradict the court’s stance in RWE/E.ON. If RWE’s 16.67% stake in E.ON was not problematic under merger control, why did Naspers’ 27.4% stake require remedies and a significant divestment to a level below the stake RWE acquired in E.ON?
The answer seems to lie in how the Commission framed the issue.
In RWE/E.ON, the minority stake was not part of the notified concentration and was reviewed separately by the German regulator. The Commission acknowledged the stake but did not assess it as conferring control or coordination. The court upheld this approach, noting that unless the stake gives rise to control, it can fall outside the scope of merger control.
In Naspers/JET, however, the Commission treated the minority stake as part of the competitive context of the merger, even though it was not acquired as part of the transaction. The Commission did not apply Art. 101 TFEU, but instead addressed the coordination risks within the merger control procedure, using commitments to eliminate the structural link.
Comparison: RWE/E.ON vs. Naspers/JET
The following table might help to illustrate how little where the two cases differ:
| Aspect | RWE/E.ON | Naspers/JET |
| Minority stake part of the concentration? | Yes (but not assessed by Commission) | No |
| Assessed under merger control? | No (left to Federal Cartel Office) | Yes (as part of competitive context) |
| Remedies imposed? | No | Yes (divestment, voting waivers) |
| Article 101 TFEU invoked? | No | No |
| Coordination risk addressed? | Not assessed | Yes, via commitments |
Minority shareholdings can be relevant, but must be structurally linked?
Both cases affirm that minority shareholdings can affect competition, but their treatment seems to depend on context:
- If the stake is part of the transaction and raises structural risks, it can be addressed within merger control.
- If it is pre-existing and not structurally linked, it may require a separate antitrust investigation.
However, in Naspers/JET, the Commission arguably stretched that framework to pre-emptively address coordination risks without launching a separate antitrust proceeding.
Merger control can address coordination risks, but only within its scope?
To be clear, the RWE/E.ON judgment does not preclude the Commission from assessing coordination risks within merger control. The ruling clarifies that Art. 101 TFEU is not the tool for reviewing concentrations. If coordination concerns arise from structural links, they can be addressed via commitments or even a prohibition as part of a merger control review.
However, if a minority shareholding is not part of a transaction, and not notified, the Commission must be cautious not to overreach its merger control powers – and that is where a certain tension between RWE/E.ON and Naspers/JET arises.
Implications for future cases
Irrespective of how well both decisions can be reconciled, there are a few implications for future cases one can already foresee:
- The Commission may continue to assess pre-existing minority shareholdings within merger control if they materially affect the competitive incentives of the parties.
- However, the RWE/E.ON judgment suggests that this approach must be carefully justified, especially in case the minority stake does not confer control and is not part of the transaction.
- If coordination risks are not structurally linked to the concentration, the Commission might need to open parallel antitrust proceedings, but could in practice also find a way to assess the effects under merger control.
Conclusion: A nuanced framework?
The RWE/E.ON judgment and the Naspers/JET decision reflect what one might call a nuanced approach to minority shareholdings in merger control. The key takeaway is that context matters.
For companies and counsel navigating EU merger control, the message is clear: Minority stakes are not immune from competition scrutiny, but the legal route depends on the circumstances.
As the Commission continues to refine its approach, and courts clarify the boundaries, expect minority shareholdings to remain a hot topic not only in merger control review (also see here). This is all the more true for digital and platform markets where strategic investments are sometimes perceived to blur the lines between competition and cooperation.
Photo by David Clode on Unsplash
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