In its Judgments of 6 November in Case C-551/10 P Éditions Odile Jacob v Commission and in Joined Cases C-553/10 P Commission v Éditions Odile Jacob and C-554/10 P Lagardère v Éditions Odile Jacob, the CJEU has clarified important concepts concerning the proposal of an upfront buyer and the role and independence required from a trustee to meet the requirements of the current EU merger rules (the press release, which provides a very clear summary, can be accessed here).
In my view, one of the key elements in the Odile Jacob v Lagardere Judgments (which may be relevant in the assessment of the current big merger in the publishing business between Penguin and Random House) is the analysis of joint control between the final buyer and the upfront buyer presented as trustee or intermediate owner (generally, a private equity firm o a similar financial institution) during the interim period prior to final transmission of the assets. As the CJEU indicates in it Judgment in case C-551/10:
34 The General Court concluded [...] that, in any event, even if the nominee holding
arrangement at issue were to have permitted Lagardère to acquire, from December
2002, sole control, or control jointly with NBP, of the target assets, such a
circumstance could not affect the legality of the contested decision, and
rejected the ground of appeal as being ineffective.
35 That conclusion of the General Court is not vitiated by
any error of law.
36 The purpose of the action brought by Odile Jacob was
solely the annulment of the contested decision by which the Commission declared
the concentration at issue compatible with the common market.
37 Even if the transactions carried out in December 2002
enabled Lagardère to acquire, as early as that period, the control, or control
jointly with NBP, of the target assets, that circumstance had no consequences
other than that the notification of the concentration at issue might be found
to have been made late or, possibly [...] that that concentration might be
found to have been implemented prematurely, and without clearance under
Regulation No 4064/89.
38 Although such findings may entail the penalties
prescribed by that regulation, inter alia the imposition of a fine, in
accordance with Article 14(1)(a) or (2) of Regulation No 4064/89, they cannot
lead to the annulment of the contested decision, since they have no relevance
to the compatibility of the concentration at issue with the common market.
39 It must be recalled that Article 7(5) of Regulation No
4064/89 provides that the validity of any transaction which is carried out
before its notification and before it has been declared compatible with the
common market is to be dependent on the decision taken by the Commission on
conclusion of the examination of the notification or of the in-depth
examination procedure. [...] the Commission, by the contested decision, authorised the concentration at
issue subject to a number of conditions.
40 Consequently, there was no need for the General Court to
examine the question whether Lagardère acquired sole control, or control
jointly with NBP, of the target assets, by means of the nominee holding
arrangement at issue, in order for it to rule on the legality of the contested
decision. The findings of the General Court in relation to that matter must
therefore be regarded as having been made for the sake of completeness.
41 It must be added that all the grounds of appeal and
arguments of the appellant concerning the possible effects of the nominee
holding arrangement are, consequently, also ineffective (CJEU in case C-551/10 at paras 34-41, emphasis added).
In this case, however, the finding by the CJEU at paras 37 and 38 seems to have been captured by the fact that the upfront buyer was a 'neutral buyer' and, consequently, the eventual joint control between Lagardère and NBP in the interim period would not have deserved a different competition assessment than the final sole control by Lagardère.
Nonetheless, in cases where the upfront buyer is not a purely financial or holding entity (but has some competitive or potentially competitive activity with the final acquirer of the assets or the target company), the situation may be different. In that regard, hence, I think that the CJEU Judgment in case C-551/10 must be taken with a pinch of salt.