Julian Beach
J.D. Candidate, Columbia Law School, 2016
Traditionally, hostile takeovers between publicly traded companies weren’t viewed as the European way of doing business.[1] Recognized as a common form of corporate practice in the United States since the enactment of broad Federal legislation in the 1960’s, European regulators and business leaders did not turn their full attention to hostile takeovers until the late 1980s.[2] Since the 1990s, mergers and public tender offers specifically have become increasingly frequent, leading the European Commission in 2004 to enact both updated merger regulation and a Takeover Directive to tackle hostile activity.[3] However, substantive differences in legal and corporate tradition in Europe and the United States, specifically with regards to institutional vesting and distribution of decision-making authority between shareholders and the board of directors, create different legal standards and incentives for markets for corporate control. How these differences relate to takeovers as a subset of all merger activity in forums such as the European Court of Justice and the Commission raises interesting legal and economic questions that inform continued evolution in the law.
In a period of fractured approaches across Europe to takeovers despite implementation of a directive, the Commission’s merger regulation mechanisms create interesting incentives and disincentives for management – both target and bidder. Could parties manipulate the Commission’s merger regulation policy as an alter-defensive measure, and if so, how does this impact the market for corporate control? Does the Commission approach apparent hostile takeover concentrations differently or in the same way with regards to the compatibility analysis or in procedure as “mergers of equals” or other horizontal consolidations?
I. Background: European Competition and Merger Regulation
A. Commission Merger Regulation
European competition law originated from the desire to establish a common market among the several Member States, but after half a century of expansion it has achieved a dramatic scope. While the Treaty of Rome (1957) included a provision to regulate the conduct of dominant firms, whose ability to abuse monopoly power posed a challenge to the project of European growth and integration,[4] it did not contemplate a merger restriction or limitation. However, as early as 1951 the Member States recognized the potentially destabilizing and harmful power of mergers to competition in the European Coal and Steel Treaty, where they ceded control over coal and steel mergers to a central supranational regulatory mechanism, the High Authority.[5] As other industries became more efficient in larger economies of scale, merger activity increased and became more transnational in nature. Merger activity is encouraged insofar as it promotes economic growth and market integration, but consolidation may also endanger competition and hurt consumer welfare. The European Community responded by adopting the first Merger Regulation in 1989, with a more comprehensive update in 2004 “designed to meet the challenges of a more integrated market and the future enlargement of the European Union.”[6] These regulations provided a EU analogue to elements of U.S. antitrust and securities law such as a notification requirement to the Commission and prohibition of anti-competitive mergers, although in a more centralized form.[7] They also greatly enlarged the scope and authority of the Commission’s review and enforcement activities on competition policy, which now handles concentrations independently of TFEU Article 102 and has performed thousands of merger reviews over the past two and a half decades.[8]
The Commission performs a detailed economic analysis as to whether the concentration in question has a “Community dimension” and “would significantly impede effective competition in the common market.”[9] This requires the Commission to identify the relevant product market and geographic market (typically national), the barriers to entry, market concentration, and the countervailing efficiency gains, among other factors.[10] The strongest indicia of Community dimension and market dominance are aggregate turnover and market share. As in the cases of Boeing/McDonnell Douglas and Gencor/Lonrho, mergers of companies based wholly outside the European Union can still fall under the Commission’s review – just as mergers of two companies within the same Member State can fall more properly within national merger regulation.[11] Where the Commission finds a concentration to be incompatible with the common market, the merging parties may appeal this decision to the General Court of the European Court of Justice, as in Gencor.[12] Similarly, a party meeting the standing requirements to challenge a Commission decision can appeal a decision approving a merger as compatible if it believes the Commission erred in its reasoning or procedure and should have found the merger incompatible.[13]
The first cases considered by the Commission under the Merger Regulation, such as the famous Aerospatiale-Alenia/De Havilland merger, involved friendly acquisitions and sales or mutual agreements between commercial partners. The Commission prioritized mergers between competitors that increased market share to dangerous levels. However, hostile takeover scenarios, where the acquirer makes a tender offer for part or all the shares of the “target” without the consent of the target company’s management, also fall under the jurisdiction of the Commission’s review. Article 3 of the Merger Regulation defines a concentration as “a change of control on a lasting basis from: (a) the merger of two or more previously independent undertakings…or (b) the acquisition, by one or more persons already controlling at least one undertaking…whether by purchase of securities or assets.”[14] This definition clearly contemplates a purchase of securities via tender offer, as suggested in Article 7(2). The acquiring party must perform the proper notifications under Article 4(1), undergo the Article 6(1) decision process regarding compatibility, and remain subject to enforcement actions under Article 8(4)(b). Unlike a contractual merger of equals, the takeover bid can proceed while the Commission reviews the compatibility of the ultimate concentration, but the Commission and the Court can order divestiture of the shares already purchased.[15]
B. Economic Considerations in Merger Policy
The Commission’s regulatory activity in the change of control space takes on more independent significance when considered in the specific economic and legal context of hostile takeovers. Merger regulation generally has always been controversial on substantive and practical economic grounds: while monopolistic behavior has well-recognized harm to consumers, mergers provide an instrument for the efficient allocation of capital, for restructuring for companies to remain competitive in a market, for increased R&D and development of new products, and strategic synergies in a globalized economy.[16] Moreover, the pace of regulatory authorization can have severe market impact since strategic mergers are extraordinarily time-sensitive. These challenges motivated in part the revisions the Commission made to its substantive assessment of compatibility in the 2004 Regulation.[17]
In the context of takeovers, free market and public policy concerns loom even larger. The basic principle of free trade, on which the economic incentives of European integration are heavily premised, suggest takeover activity creates growth via efficient allocation of capital and management, and the state therefore should support, not hinder, such activities.[18] Merger economists commonly refer to this positive economic impact of acquisitions as the efficient market for corporate control:[19] the stock price a corporation will reflect the quality of management, and thus it’s in the interest of growth that management be freely alienable and purchasable. In takeovers, where “time is of the essence” often even more so than a contractual merger, prolonged Commission review and potential litigation threaten to derail the efficient flow of capital.[20]
Conversely, Europeans have been increasingly concerned not just with takeover activity within the EU, but also activities targeting EU companies from abroad.[21] Member States governments and “national champions” look for measures to protect against aggression from Chinese and Russian conglomerates or American corporate raiders, especially with current perceptions of U.S. firms in the political and public arena.[22] These pressures can lead to substantive shifts in the legal landscape. For example, in the aftermath of the Cadbury takeover by Kraft, a US company, witnessed the United Kingdom – a traditionally raider-friendly jurisdiction – making substantive changes to its takeover rules, including permitting boards to solicit alternative offers and placing stricter timetables on the offeror party.[23] Considerations of how the European Commission and its regulatory power should interface with public policy choices have entered into the discourse on merger regulation.[24]
II. Differences in Takeover Law: European Union & United States
A. United States M&A Law
The state of takeover law in Europe and its important contrasts with the U.S. also inform the potential impact of the Commission’s competition activity on the competitiveness of European markets. Corporate law in the United States vests the Board of Directors with critical authority and discretion, including management of the corporation’s “business and affairs” and a duty to protect the corporate enterprise.[25] Legal power distributes between the board and the rights and interests of shareholders,[26] and the nature of this balance dictates several of the important differences between US and EU corporate law. In 1968, Congress passed the Williams Act, updating the Securities Exchange Act to regulate tender offers by specifying the actions the offeror company and target board must take.[27] Many of the operative parts of the EU merger policy, including the Takeover Directive, draw upon this federal regulation in areas such as notification requirements, best price rules, and action by the board. Over the next couple decades, Delaware law adopted a heightened standard of judicial scrutiny when reviewing the defensive maneuvers and exclusionary conduct of boards when fighting off a takeover attempt.[28]
However, case law established the principle that a board of directors had no obligation to remain neutral and could institute measures that make a takeover attempt more difficult, so long as it was not “forever unattainable:” specifically, a “combination of a classified board and a Rights Plan do not constitute” an impermissible result.[29] Moreover, while under Revlon a board must seek to maximize shareholder value as a normative constraint,[30] in the United States a corporate board can consider other factors such as corporate culture and can legally act to refuse and block a raider offering a higher price to preserve an alternative board-sanctioned deal.[31] In certain circumstances, active deals may also receive protections in the form of termination penalties and no-shop clauses. This flexibility has economic and legal consequences: takeover disputes devolve into litigation more quickly, but more importantly, the sale of control is less fluid and the market for purchasing corporate control less efficient.[32]
B. European M&A and the Takeover Directive
By contrast, European capital markets and corporate governance have placed more emphasis on the agency of shareholders to achieve a fair price and the development of a competitive market for corporate control. Laws encourage boards to remain neutral in takeover struggles, while providing similar practical protections as U.S. law to target shareholders and acquirers alike. These free market principles with regard to corporate control are reaffirmed by the EU Takeover Directive, which limits the defensive maneuvers a corporate board or shareholders might take to reject or block a tender offer or proposed acquisition.[33] The European Union sought to achieve the dual objectives of harmonizing merger policy on a European level and “creat[ing] favorable conditions for the emergence of a European market for corporate control.”[34] It dismissed the idea that subsidiarity would prohibit its entry into the regulatory sphere:
“[S]ince the objectives of the action envisaged…cannot be sufficiently achieved by the Member States because of the need for transparency and legal certainty in the case of cross-border takeovers and acquisitions of control, and can therefore…be better achieved at Community level…in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty.”[35]
The Directive operates to stymie defensive maneuvers on the part of the offeree company board and protect shareholder interests. Article 3(1)(c) places authority in the hands of the shareholders by requiring the board to submit to the shareholders the merits of the bid, while Article 3(1)(d) prevents the creation of “false markets” such that “the rise or fall of the prices of the securities becomes artificial” and the “normal functioning of markets is distorted.” Article 9 addresses the obligations of the board of the target, establishing a neutrality standard with regard to hostile bids. The board must obtaining prior authorization of the shareholders before taking “any action which may result in the frustration of the bid and in particular before issuing any shares which may result in a lasting impediment to the offeror’s acquiring control,” or in other words, remain neutral: unlike Delaware law, boards lack discretion to act on a Shareholder Rights Plan or poison pill.[36] The board neutrality rule “facilitates takeover activity” to exploit “synergies and discipline the management of listed companies” pursuant to a Commission and Council-approved efficient market hypothesis.[37]
Crucially, the Article 11 “Breakthrough” Rule specifically limits defensive maneuvers or deal protections and entrenches the Directive as pro-takeover legislation. It “makes certain restrictions…inoperable during the takeover period and allows a successful bidder to easily remove the incumbent board of the target.”[38] In practice, the conjunction of breakthrough and board neutrality would “effectively expand the market for corporate control.”[39] However, critics view the Takeover Directive ultimately passed in as achieving only mixed success.[40] Part of the issue stems from the choice of a Directive to address takeovers, rather than a regulation. Directives require implementation on the national level, and many of the important prescriptions contained in the Takeover Directive – such as the breakthrough and board neutrality rule – are optional.[41] This permissive derogation implies that the success or failure of the Directive’s initiatives depend upon the “modalities of implementation” in the Member States. Implementation has produced uncertain results with regards to both harmonization across the EU and improving open markets for corporate control. Recently, in response to several dramatic cross-border takeover battles and the urge to protect national champions, individual European countries have begun to view defensive maneuvers with less skepticism.
In Germany, just prior to the passage of the Takeover Directive, the Act on the Acquisition of Securities and Takeovers echoed ongoing concerns from the takeover of Mannesmann AG, a domestic firm, by Vodafone/Airtouch Plc, an Anglo-American communications company, including transparency for shareholders and anti-takeover provisions. The Act intended “to allow possible defensive procedures,” providing boards and executives with a series of defensive tactics, including bring in another merger partner as a “White Knight,” or dealing in their own shares.[42] In the United Kingdom, the U.K. Takeover Code made effective September 2011 complied with the scriptures of the EU Takeover Directive, including breakthrough fees and ban on false markets, but took advantage of certain nationwide opt-outs. It also enacted stricter 28-day deadlines, the guarantee of bidder’s liquidity for a full cash offer for the target, and banned deal protections (which are still active in the United States).[43] However, observers agree it signifies a shift in the balance of power toward target boards and away from hostile bidders, in contravention to the spirit of the Takeover Directive.[44] The European Parliament could continue to “facilitate movement towards the fair and balanced harmonization of rules on takeovers in the European Union,”[45] but the Commission also has an interesting and impactful role to play in creating value maximization or harmonizing standards.
III. Impact of EU Competition Law on Takeovers
Case Studies
The European Parliament and Council created an environment in which it’s more difficult as corporate management to institute defensive measures or block an active takeover effort, so long as the raider has sufficient cash on hand to compensate shareholders. However, since the Commission still reviews any takeover activity with a Community dimension between firms with substantial market power, an additional layer of defense remains available to parties seeking to undermine or destroy a bid. Could this layer fill a void of board discretion and have a notable influence on the market? The procedural mechanics of the Merger Regulation have both a substantive and practical impact: while the decisions of the Commission and the Court on review will dictate what merging parties can do by the letter of the law, the time it takes to review a takeover and the mere threat of an incompatible ruling may stave off hostile activity and reduce the vibrancy of the market for corporate governance.
The diversity of cases brought to the European Court of Justice illustrates the Commission’s impact on a wide variety of commercial transactions. Traditional merger cases arise in one of two ways described in Part II. The Commission finds a merger incompatible with the common market pursuant to Article 6 of the Merger Regulation and the merging parties challenge the decision in court,[46] or, alternatively, the Commission approves a merger as compatible, but a competitor who fears their relative market power will diminish sues to annul the Commission’s decision.[47] For this second category, the concentration must be of “direct and individual concern” to the applicant.[48] The merging parties will often intervene on behalf of the Commission when a competitor challenges the transaction.
To block a takeover, on the other hand, parties appealing to the Commission have several options. The target can assert the concentration – if completed – would increase the dominance of the acquirer and hurt consumers. In the Ryanair/Aer Lingus cases, the merging parties found themselves on either side of the litigation.[49] Ryanair Holdings made a public bid for Aer Lingus, one of its close competitors in the airline industry, in October of 2006. It notified the Commission a week later, and underwent the Article 6(1)(c) procedure. Aer Lingus opposed the bid, but pursuant to the Takeover Directive, it could not institute radical defensive measures or prevent Ryanair from acquiring a 19% share within the first ten days of the public tender. Rather, it participated in the Commission’s review process, actively encouraging the Commission to find the takeover problematic. In a proceeding for interim measures, Aer Lingus applied for an order requiring the Commission to take measures against Ryanair.[50] Moreover, Aer Lingus made pivotal procedural motions in its submissions to the Commission, urging the Commission to consider all the hostile acquisitions as a single concentration – a position making a finding of incompatibility under the standards discussed in Part II considerably more likely.[51] Lastly, while Ryanair submitted conditions to the Commission for review, strategically speaking, without cooperative assurances and mutual conditions from both parties, the Commission was less likely to find the harm to competition sufficiently diluted.[52]
In June of 2007, the Commission declared the Ryanair/Aer Lingus concentration incompatible with the common market.[53] By that time, Ryanair had acquired 25.17% of Aer Lingus, but the takeover failed – not by operation of traditional defensive maneuvers such as a staggered board or a rights plan, but rather, by virtue of the Commission’s Merger Regulation. After evaluating the nature of the competitive relationship between the two firms, the barriers to entry, the efficiencies that would flow from the concentration and the analysis of the commitments, the Court found for Aer Lingus and the Commission and dismissed the application.[54] Nearly four years had gone by since Ryanair first announced its bid, over which the strategic landscape of the airline industry and the benefits of the merger to the acquirer could have shifted significantly. Coincidentally, the parties danced around each other in the ensuing litigation as Ryanair successfully intervened in support of the Commission to prevent Aer Lingus from forcing a divestiture.[55]
A second form of regulatory takeover struggle triggers at an earlier stage when the target seeks to engage the Commission in the process with a finding that the takeover has a Community dimension. In 2005, Gas Natural made a bid for Endesa, whose board rejected the initial offer. Endesa petitioned the Commission to review the concentration as declare it inadmissible as part of their defense strategy.[56] Since both Endesa and Gas Natural were Spanish companies, the Commission referred the case to the Spanish competition authority, which subsequently found the takeover would violate national competition law. Regardless, Endesa contested the Commission decision in the General Court.[57] The case was mired in domestic political rivalries, and Endesa would ultimately fall prey several years later to buyouts by German energy conglomerates. Regardless, the time it took the Commission to resolve the jurisdictional question arguably played a key role in preventing a merger with Gas Natural or another suitor at that time.[58] By raising the cost of time-sensitive takeover mergers through administrative and regulatory EU channels in this way, European merger control measures risk “protecting incumbents from hostile bids.”[59]
As a final point, examples of hostile takeovers wrangled through the Commission and the Courts can have cumulative effects on the strategic value of a concentration and the efficiency of the markets for corporate control. Famously in the Schneider v Legrand cases, the Commission blocked the takeover attempt by Schneider, a household equipment manufacturer, of Legrand, a smaller rival, only to see the decision reversed by the Court of First Instance.[60] Legrand’s management retained a consistently hostile position towards the takeover effort, regularly rejecting planned merger efforts between the two companies. However, Legrand’s board had been unable to block a 98.1% acquisition of shares via traditional defensive measures. Rather, it pursued competition law channels, with initial success: the Commission ordered full divestiture after Schneider had already completed the merger.[61] Given the immense transaction costs of such coupling and decoupling, when the Court reversed the Commission’s decision, Schneider arguably achieved a pyrrhic victory. It ultimately decided to sell its stake in Legrand despite the favorable ruling. By operation of commercial and temporal forces, regulatory authority provided a meaningful disincentive on the part of the acquirer and opportunity for a hostile target management.
Final thoughts
Of course, compelling arguments exist to justify added defensive alternatives for companies to repel a takeover bid. As often discussed in U.S. merger law, increased latitude and discretion on the part of the board can provide a stronger negotiating position to achieve a higher price for shareholders.[62] The market price develops as a function, in part, of the regulatory framework. Critics of the Takeover Directive suggest the E.U. approach “may actually thwart value maximization” by curtailing the “flexibility to implement” advantageous takeover defenses, such as properly designed poison pills, or the ability of current ownership to leverage full premiums.[63] The Takeover Directive and its pro-takeover opt-in provisions balance with the structural and normative limitations of the Merger Regulation and litigation process to affect the efficiency of the market for corporate control. As a further layer of nuance, the directive structure provides for a variety of implementations across the Member States. Indeed, since the European Commission applies the same legal standards to hostile concentrations as friendly ones, any potential check on hostile takeover activity provided by engaging European competition authorities results in the privileging efficient allocation of corporate control from a consumer perspective, even where it appears “anti-takeover.”
Regardless of which argument holds sway, it’s worth considering how parties operationalize and interact with the European merger regime in the context of their takeover struggles and the intended results of the Takeover Directive. This also raises the pseudo-political question of how the European Commission and takeover policy influence the competitiveness of European firms abroad. Competitiveness of the market may correlate with ease of acquisition and free flow of capital, but national authorities certainly respond in more protective ways to hostile takeovers with discrete political consequences, as discussed in Germany and the United Kingdom. Ultimately, all of these variables, including litigation of hostile competition cases, should play a role in determining the future of European Union takeover policy and the mechanisms available to firms and nations to protect shareholder and consumer interest, respectively.
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[1] William Boston, “Hostile Takeovers, Euro-Style,” Bloomberg (April 20, 2006), available at http://www.bloomberg.com/bw/stories/2006-04-20/hostile-takeovers-euro-style. (“Once frowned upon as impolite in a corporate culture obsessed with maintaining harmony with politicians and unions, hostile and unsolicited takeover bids are on the rise.”)
[2] Barbara White, Conflicts in the Regulation of Hostile Business Takeovers in the United States and the European Union, 9 IUS Gentium 161, 179 (2003).
[3] Council Regulation (EC) No 139/2004 of 20 January 2004; Directive 2004/25/EC of the European Parliament and of the Council of 21 April 2004 on takeover bids, 2004 O.J. (L 142) 12.
[4] Treaty Establishing the European Economic Community, Mar. 25, 1957, art. 86], preserved as Treaty on the Functioning of the European Union art. 102, 2008 O.J. C 115/47
[5] Treaty Establishing the European Coal and Steel Community, Apr. 18, 1951, art. 66…
[6] Council Regulation (EEC) No 4064/89 of 21 December 1989; Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings (the EC Merger Regulation) of 20 January 2004, Preamble para. 6.
[7] See Clayton Antitrust Act of 1914, 15 U.S.C. §§ 12-27; 29 U.S.C. § 52.
[8] Christopher Jones, EU Competition Law Handbook 2015 (2014).
[9] Council Regulation (EC) No 139/2004, supra note 6, art. 2.
[10] See, e.g., General Electric/Honeywell Commission decision 2004/134/EC [2004] O.J. L 48/1, Case COMP/M.2220; Tetra Laval/Sidel Commission decision 2004/124/EC [2004] O.J. L 43/13, Case COMP/M.2416. See also George Bermann et al. Cases and Materials on European Union Law, 3d 1014–15 (2010).
[11] Boeing/McDonnell Douglas, Case IV/M.877, O.J. L 336/16 (Dec. 8, 1997); Gencor/Lonrho, Case IV/M.619, O.J. L 11/30 (1997). See also Endesa SA v Commission, discussed infra.
[12] Case T-102/96, Gencor v Commission [1999] ECR II-753.
[13] E.g. Case T-114/02, BaByliss SA v Commission [2003] ECR II-01279, where a competitor in the industry of the merging parties – SEB and Moulinex – believed the concentration would create a dominant position and thus opposed the merger and sought annulment of the final decision in Case M.2621.
[14] Council Regulation (EC) No 139/2004, supra note 3, art. 3.
[15] See Case IV/M.2283, Schneider/Legrand; Case T-77/02, Schneider v Commission [2002].
[16] Lars-Hendrik Roller, “The Impact of the New Substantive Test in European Merger Control,” European Competition Journal Vol. 2., at 13 n. 8 (April 2006), available at http://ec.europa.eu/dgs/competition/economist/merger_control_test.pdf.
[17] For detailed discussion of the early results in the change in guidelines, under or over-enforcement, and its economic consequences, see Lars-Hendrik Roller, supra note 17.
[18] David Larcker, “The Market for Corporate Control,” Stanford Graduate School of Business Center for Leadership Development and Research, available at http://www.gsb.stanford.edu/sites/gsb/files/publication-pdf/cgri-quick-guide-11-corporate-control.pdf.
[19] Id; H.G. Manne, “Mergers and the Market for Corporate Control,” Journal of Political Economy (1965).
[20] Xavier Vives, “Brussels has not gone far enough in its merger reforms,” FT.com (Dec. 15, 2005), http://blog.iese.edu/xvives/files/2011/09/207.pdf.
[21] Pawl Jarczewski, “New EU rules can stop politically motivated hostile takeovers,” EurActiv.com (August 22, 2014), available at http://www.euractiv.com/sections/euro-finance/new-eu-rules-can-stop-politically-motivated-hostile-takeovers-307904.
[22] James Kanter, “E.U. Parliament Passes Measure to Break Up Google in Symbolic Vote,” N.Y. Times (Nov. 27, 2014), available at http://www.nytimes.com/2014/11/28/business/international/google-european-union.html?_r=0.
[23] Anousha Sakoui, “UK takeover rules put targets on defensive,” Financial Times (October 30, 2011), available at http://www.ft.com/cms/s/0/1f0cc66a-00b1-11e1-8590-00144feabdc0.html – axzz3Vh3ss2fm.
[24] See, e.g., Roller and De La Mano, supra note 17.
[25] See, e.g., 8 Del.C. § 141(a); 8 Del.C § 160(a); Williams Act, 15 U.S.C.A. § 78a et seq. Courts judge decisions made by boards of directors in the context of a takeover by the classical Business Judgment Rule. See Unocal v. Mesa, 493 A.2d 946 (Del. 1985). The emphasis on board discretion rests largely on the theory that individual shareholders in complex, publicly traded enterprises act passively and have less incentive than management to actively oversee and participate in proper governance.
[26] See Schnell v. Chris-Craft Industries, Inc., 285 A.2d 437 (Del. 1971); Blasius Industries, Inc. v. Atlas Corp., 564 A.2d 651 (Del. C. 1988).
[27] See 17 CFR 240.14e-2; 15 U.S.C.A. § 78a et seq.
[28] Unocal, 493 A.2d 946; Unitrin, Inc. v. American General Corp., 651 A.2d 1361 (Del. 1995).
[29] Air Products and Chemicals v. Airgas, 16 A.3d 48 (Del. Ch. 2011) (finding a defensive measure to block an unwanted suitor constituting a classified board and poison pill or Shareholder Rights Plan not preclusive).
[30] Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173 (Del. 1986).
[31] See Paramount Communications, Inc. v. Time Inc. 571 A.2d 1140 (Del. 1989) (“Directors are not obliged to abandon a deliberately conceived corporate plan for a short-term shareholder profit”).
[32] See H.G. Manne, supra note 19. A common argument in favor of deal protections and defensive measures is that they serve as a bargaining mechanism to increase share price and overall value. Research suggests, however, that anti-takeover protections generally reduce the quality of the market and governance. Id.
[33] See Directive 2004/25/EC of the European Parliament and Council of 21 April 2004 on takeover bids, O.J. L 142/12.
[34] Caterina Moschieri & Jose Manuel Campa, New Trends in Mergers and Acquisitions: Idiosyncrasies of the European Market, J. Bus. Research 1, 2 (2013). This was not the first attempt by the European Union to establish a Europe-wide framework for company takeovers. In 2001, the European Parliament rejected a prior draft of such a Directive. See Modlich and Sinewe, supra note 34.
[35] Directive 2004/25/EC, Preamble para. 26.
[36] Id, art. 9(2).
[37] Report of the High Level Group of Company Law Experts on Issues Related to Takeover Bids, at 2 (Jan. 10, 2002).
[38] Id.
[39] See Susie Choi, An Evaluation of the EU Takeover Directive Through the Lens of the Harmonization Process, Stanford-Vienna Transatlantic Technology Law Forum, at 10 (2014).
[40] Id. at 11; Application of Directive 2004/25/EC on Takeover Bids, at 3, COM (2012) 347 final (June 28, 2012).
[41] Id. at 8, 10.
[42] Thomas Stohlmeier, German Public Takeover Law: Bilingual Edition with an Introduction to the Law (2002); Joachim Modlich and Patrick Sinewe, “The New German Acquisition of Securities and Takeover Act” (2002), available at http://www.mayerbrown.com/Files/Publication/e6f3e3e5-2621-42a1-9916-3e3ec744d527/Presentation/PublicationAttachment/019cf0f0-1c61-430b-a2db-b595affb1620/1368.pdf.
[43] “U.K. Takeover Code – Changes Effective September 19, 2011,” Skadden (Sep 21, 2011), available at http://www.skadden.com/newsletters/UK_Takeover_Code_Changes_Effective_September_19_2011.pdf.
[44]Id.
[45] Anousha Sakoui, “UK takeover rules put targets on defensive,” Financial Times (October 30, 2011), available at http://www.ft.com/cms/s/0/1f0cc66a-00b1-11e1-8590-00144feabdc0.html – axzz3Vh3ss2fm.
[46] Famous examples include Case T-102/96 Gencor v Commission; Case T-5/02, Tetra Laval v Commission; Case T-209/01, General Electric v Commission.
[47] Case T-114/02, BaByliss v Commission.
[48] See Article 263 TFEU; Case T-224/10, Association belge des consommateurs test-achats ASBL v Commission, 12 October 2011, 2011 II-07177. (“For decisions of the Commission relating to the compatibility of a merger with the common market, the locus standi of third parties concerned by a merger must be assessed differently depending on whether they…rely on defects affecting the substance of those decisions or…submit that the Commission infringed procedural rights granted to them by the acts of the” EU). Commission cleared the merger between EDF and Segebel as compatible, Decision C(2009) 9059 (Case COMP/M.5549). Following commitments proposed by EDF, the Commission concluded that the merger no longer raised serious doubts as to its compatibility with the common market, without any need to initiate the “Phase II” procedure under Article 6(1)(c) of Regulation No 139/2004. The action was dismissed for lack of standing.
[49] See Case T-342/07, Ryanair v Commission [2010] and Case T-411/07, Aer Lingus Group v Commission [2010] ECR II-03691.
[50] Case T-411/07, Aer Lingus Group v Commission [2008] ECR II-00411.
[51] Case T-411/07, Aer Lingus Group v Commission [2010] ECR II-03691.
[52] Often in merger regulation cases, the friendly merging parties make significant commercial adjustments to appease the Commission’s fears about the compatibility of the merger. See, e.g., Case T-48/04, Qualcomm Wireless Business Solutions Europe BV v Commission [2009] ECR II-02029. DaimlerChysler and its merger partner Deutsche Telekom agreed to three sets of conditions to submit the Commission. These joint commitments were ultimately dispositive in the case, where the Court upheld a Commission ruling of compatibility against a challenge by a competitor.
[53] Decision C(2007) 3104 of 27 June 2007, Case COMP/M.4439.
[54] Ryanair v Commission, supra note 48.
[55] Aer Lingus Group v Commission, supra note 50.
[56] Ambrose Evans-Pritchard, “Endesa bid rejected amid storm of conspiracy,” The Telegraph (Sep. 7, 2005), http://www.telegraph.co.uk/finance/2921753/Endesa-bid-rejected-amid-storm-of-conspiracy.html.
[57] Case T-417/05, Endesa SA v Commission [2006] ECR II-2541.
[58] Xavier Vives, supra note 20.
[59] Id.
[60] Case T-310/01, Schneider v Commission [2002].
[61] “A shocking denouement,” The Economist (Oct. 11, 2001), available at http://www.economist.com/node/814366.
[62] See Revlon, Inc., 506 A.2d 173.
[63] Choi, supra note 38, at 19–20.
