In its judgment dated 2 July 2025 in case T-289/24 Brasserie Nationale and Munhowen SA vs. Commission, the General Court of the European Union (EU) (the “Court”) upheld the decision of the European Commission (the “Commission”) to examine a merger project involving two Luxembourg-based entities active in the market of beverages production and distribution. Although the transaction did not meet the thresholds for EU-level notification under Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (the “Merger Regulation”), it was referred to the Commission by the Luxembourg Competition Authority (Autorité de la concurrence) under Article 22 of the Merger Regulation.
Background to the dispute
On 31 January 2024, Brasserie Nationale, a Luxembourg beer and mineral water producer, announced its acquisition of sole control of Boissons Heintz, a Luxembourg wholesale distributor of beverages in Luxembourg, through the acquisition of all of the latter's shares by its subsidiary Munhowen (the “Merger”). In the absence of relevant turnover figures, the Merger did meet the European dimension within the meaning of Article 1, para. 3, of the Merger Regulation.
While, normally, the Merger would be treated by national competition authorities, the Grand Duchy of Luxembourg did not have at the time of the Merger (nor does it have now) a legislation dedicated to the control of concentrations. It can be noted, on this, that a draft law on concentration has been proposed to the Luxembourg Parliament (Chambre des députés) (being Draft Law No. 8296), without, however, having been adopted yet. Please see our previous newsflash on this topic.
In this context, on 7 February 2024, the Competition Authority used its faculty under Article 22 of the Merger Regulation to request that, absent a national law on control of concentrations, national competition authorities may request that a merger project be examined by the Commission. The council actually suspected that the Merger may affect trade between Member States and threaten to significantly affect competition within the Luxembourg territory, which are the conditions under which the referral in such provision can be triggered.
The issues at stake
Article 22 was expressly introduced to allow the Commission to review transactions that, despite lacking a European dimension, may significantly impede competition and affect trade between Member States. The matter was of immediate concern, considering the limited territorial extension of Luxembourg and the importance of Brasserie Nationale and Boissons Heintz as actors in, respectively, the production and distribution of beer and other beverages.
Given this, the Commission accepted the referral and, following its analysis, concluded that the Merger may affect both the intercommunity trade as well as competition in the internal market. Luxembourg’s Competition Authority was therefore vigilant enough to understand that the Merger might pose such risks and, pending the adoption of draft law No. 8296, refer the examination of the merger proposal to the Commission.
The findings of the Court
The applicants challenged not only the admissibility of the referral under Article 22 but also the Commission’s substantive assessment. However, as is typical in merger control litigation, the Commission enjoys a wide margin of discretion, and only manifest errors can lead to annulment.
The Court found that, as stated by the Commission, the Merger was likely to affect trade between Member States. As consistently held in the Court’s case-law, it is immaterial that a concentration might relate solely to the territory of a single Member State: what matters is whether the entity resulting from the Merger may prevent market access for other operators. In the present case, the Court considered that the merging entities, combining Brasserie Nationale’s production activities with the distribution network of Boissons Heintz, could effectively seclude the Luxembourg market by foreclosing competitors from accessing it.
With respect to harming competition, the Court essentially upheld the Commission’s structural concerns. First, it noted that the merging parties held significant combined market shares in both beverage production and distribution in Luxembourg. In addition, the scarcity of alternative distributors in the country increased the likelihood that competitors would face foreclosure from the market. It was also emphasised the absence of international players in Luxembourg’s beverage sector. Whereas in larger Member States competition may be preserved by the presence of multiple large-scale producers and distributors, the Luxembourg market appeared more insulated and therefore more vulnerable to concentration effects.
Furthermore, the degree of product substitutability in the relevant markets, particularly for beer and related beverages, was considered limited, meaning that consumers could not easily switch to comparable alternatives in the event of price increases or reductions in quality. The Court further observed that customers, being spread across the country and relatively atomised, lacked significant buyer power that could counterbalance the effects of the concentration. Finally, it found that the strengthened position of the merged entity could raise significant barriers to entry for new competitors, further reducing the competitive dynamics of the market.
Taken together, these factors led the Court to conclude that the Commission had not committed a manifest error in determining that the Merger could significantly impede effective competition, notwithstanding its national dimension and geographic scope. Significantly, the Court concluded the judgment by stressing the importance of the Commission’s discretion under Article 22 of the Merger Regulation, as, in the absence of a Luxembourg regulation on the control of concentrations, it allowed apprehending the Merger’s negative impact on competition and interstate trade.
The way forward
This judgment not only clarifies the scope of Article 22 of the Merger Regulation but also highlights the role of EU law in filling gaps in national frameworks. The referral mechanism worked as intended, allowing the Commission to scrutinise a transaction with potentially adverse effects on competition and interstate trade in a Member State lacking its own merger control regime. The future adoption of Draft Law No. 8296 would grant Luxembourg greater autonomy in overseeing such transactions. Until then, Article 22 was confirmed to be a critical tool for Member States without national merger regimes (like Luxembourg) to bring cross-border deals before the Commission.
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