This presentation by the OECD Competition Division was made during a roundtable discussion on Jurisdictional nexus in merger control regimes held at the 123rd meeting of the Working Party No. 3 on Co-operation and Enforcement on 15 June 2014. More papers, presentations and contributions from delegations on the topic can be found out at www.oecd.org/daf/competition/jurisdictional-nexus-in-merger-control-regimes.htm

1. Local Nexus
in
Merger Control
Presentation of the OECD Background paper
Pedro Caro de Sousa
OECD Competition Division
Working Party No. 3 on Co-operation and Enforcement
15 June 2016 Roundtable

2. The Background note together will all materials related to the
discussion can be found at:
http://www.oecd.org/daf/competition/jurisdictional-nexus-in-
merger-control-regimes.htm
2

3. The increasing number of cross-border mergers, the proliferation of
merger control regimes, and the limited resources competition
authorities have to enforce competition law make it important that
authorities only review those mergers that have an impact on their
jurisdiction.
The 2005 OECD Council Recommendation on merger review included
recommendations on notification and review procedures, jurisdictional
thresholds and appropriate local nexus criteria.
In 2013, the OECD prepared a Report on Country Experiences that
looked at the Recommendations impact in practice.
Abstract
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4. The background paper builds on this work and assesses the local
nexus criteria of a number of OECD and non-OECD jurisdictions by
reference to Recommendation.
It is found that all countries have local nexus criteria, and that in most
countries these criteria comply with the Recommendation.
A trend towards greater compliance in this respect since 2005 is also
observed.
The paper also unearths some patterns in the design of merger control
thresholds that raise questions regarding the possibility of greater
compliance with the OECD Recommendation and the adequacy of its
recommendations for some jurisdictions.
Abstract
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5. Structure
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1. Background
2. Method
3. Results
4. Questions
1. on merger review in emerging high innovation markets

6. 2005 – OECD Recommendation on Merger Review
2013 – OECD Report on Country Experiences
– OECD Roundtable on Definition of Transaction for
Merger Control
ICN Merger Working Group:
-Recommended Practices (2002 and 2008)
-Report on Costs and Burdens of Merger Review (2004)
Background
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7. Local Nexus
–Merger control only over transactions with “appropriate” local nexus
–Local nexus is relevant for identification of “mergers that could raise
competition concerns in the territory”
–Discretion as to required level of materiality of transaction for
jurisdiction
–Guiding principles for establishing local nexus:
• Based on activity of merging parties in the territory
• Measured by reference to acquired entity or at least two parties to
transaction
Background
7

8. • Thresholds – objective and certain v. flexible and targeted
Social Costs of Merger Review < Benefits of Merger Review
• Various considerations relevant when setting notification thresholds:
– Mandatory or voluntary?
– Previous experience / benchmarking
– Size of economy
– Market structures
– Alternative competition tools
Background
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9. • Objective – assess compliance with Recommendation
• Method – review of notification thresholds in 53 jurisdictions
+
comparison with international recommendations
•Merger Notification Thresholds
– Different types
– Combinations of types (alternative, cumulative, and even both alternative
and cumulative simultaneously)
The Paper
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10. • Types of Notification Thresholds
– Turnover (worldwide and local)
– Assets (worldwide and local)
– Value of Transaction
– Market Shares
• Additional tools
– Exemptions
– Residual jurisdiction
– Previous finding of dominant position
– Domestic effects
The Paper
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11. General adoption of
Recommendation as regards
local nexus
Results
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12. • Many reforms to competition acts and merger control
thresholds since 2005
• Trend towards greater compliance with the
Recommendations
• Some jurisdictions have reviewed their competition
laws but decided not to align themselves fully with the
Recommendation
Results
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13. • Changes: Why have countries been amending their notification thresholds?
Why have some decided against following the Recommendation?
• Setting notification thresholds: How do jurisdictions set them? Is there a
developing international best practice?
• Materiality: Should focus be on local nexus or on identifying problematic
mergers? Is this a false question? What is an “appropriate” local nexus? What
is a sufficiently “material” transaction?
• Assessing the Recommendation: Is it appropriate for all cases (e.g. voluntary
notification systems)? Have some limitations been identified? Do the
developments of the past 10 years mean that an update is in order?
Questions
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