Luxembourg State Council formally opposes adoption of national merger control bill of law

Bill of law 8296 (Bill) aims to introduce a national merger control regime, to be applied and enforced mainly by the Luxembourg Competition Authority (Authority).

In its opinion published on 3 June 2025, the Conseil d’Etat (State Council) formally opposed adoption of the Bill in its current form, considering that the Bill’s significant structural, legal and drafting deficiencies are such that, overall, it fails to meet the constitutional requirement of legal certainty.

Substantive legal issues relating to scope of application, procedural safeguards and investigative powers

Objectives

The State Council’s first recommendation is that the objectives of the merger control regime should be stated at the beginning of the Bill.

Failure to notify

The State Council  questions whether a mechanism should be introduced into the Bill to allow the Authority to investigate concentrations that meet the thresholds, but which the parties have failed to notify.

Interim measures and injunctions

The opinion considers the provisions regarding the interim measures and injunctions that the Authority may effect (Article 38) to be inadequate and thus in breach of freedom of commerce and the principle of legal certainty. According to the State Council, the current Bill needs to define what constitutes an “appropriate interim measure” and set out the procedure for replacing an interim measure with a definitive solution. Further, the State Council is concerned that the Bill gives powers to the Authority that are too vaguely circumscribed and potentially infinite, giving rise to legal uncertainty. It considers that clearer rules are required, notably as regards the scope, nature and follow-up of provisional measures, to ensure these powers are appropriately framed and limited.

Proportionality of investigative powers

The State Council questions the proportionality of the Authority’s investigative powers. In the current Bill, the investigative powers stem from the wide-ranging investigative powers given to the Authority in the context of investigations into anti-competitive behaviour and agreements prohibited by the law of 30 November 2022. The State Council stresses that this must be clearly justified in the context of an ex-ante merger control system, and requests further explanation of the necessity for such far-reaching investigative powers.

Territorial connection criteria

The opinion comments on the territorial connection criteria, which are limited to pre-tax turnover generated in Luxembourg. According to the State Council, the future law could therefore apply extraterritorially to a merger operation carried out abroad which involves companies whose individual and collective turnovers in Luxembourg exceed the relevant thresholds. It expresses doubt as to whether this extraterritorial scope is the true intention of the Bill’s authors and requests clarification.

This is a strange criticism as these criteria aim to catch all transactions having an impact on domestic markets and are usual in merger control regulations. The Court of Justice of the European Union (CJEU), under the so-called ‘qualified effects doctrine’, has consistently considered that Articles 101-102 TFEU apply to conducts or practices which, while not adopted within the EU, have anticompetitive effects liable to have an impact on the EU market.

Serious concerns regarding government oversight and emergency derogations undermining the Authority’s independence

The State Council opposes in principle two mechanisms introduced by the Bill:

• Article 44, which grants the government a power of evocation enabling it to annul decisions of the Authority on grounds of “general interest” other than ensuring that there is fair competition. The State Council views this power as political in nature and lacking effective judicial remedies (there is no possibility of appeal), and considers that it is incompatible with the Authority’s independence and undermines the foundations of the rule of law.
• Article 47, which empowers the Commission de Surveillance du Secteur Financier (CSSF) to remove cases from the Authority’s jurisdiction in an emergency, is rejected on the same grounds. Under the current Bill, the CSSF may exercise this power for early intervention, recovery or resolution measures concerning financial institutions and in other “emergency situations”, leading to non-application of merger control rules. The State Council considers this problematic as it creates unjustified exceptions to the national merger control regime, undermining its consistency and raising rule of law concerns.

Clear, consistent and precise legislative drafting required

The opinion makes a number of observations regarding the need to simplify wording, harmonise terminology and delete redundant or non-substantive provisions. It also criticises inappropriate references to existing laws, particularly the amended law of 30 November 2022 on competition, stating that the procedures laid out in this law cannot simply be transposed into the merger control regime without adaptation. Failure to do so risks undermining the clarity, accessibility and predictability of the law, as required by constitutional jurisprudence to ensure legal certainty.

Given these substantial criticisms, the State Council concludes that the Bill should not be adopted in its current form and requires comprehensive revision before the legislative process can continue.

What are the next steps in the legislative procedure?

From a procedural point of view, a negative opinion from the State Council does not block adoption of the Bill, but it does cause a delay. Article 78 of the Luxembourg Constitution requires a double vote, with a minimum interval of three months between the two readings. In practice, Parliament may request waiver of the second vote, but if the State Council issues a formal opposition, the waiver will not be granted. Therefore, even if the Bill is adopted at the first reading, Parliament must vote on it again at least three months later.

The expected next steps for the Bill are as follows:

• finalisation of the report by the designated Parliamentary committee;
• debate in a public session of Parliament, during which the Bill may still be amended;
• two-stage vote as described above;
• promulgation by the Grand Duke and publication in the Official Journal.

In light of the State Council’s formal opposition and the significance of its legal and structural concerns, it is clear that Luxembourg will not have a national merger control regime in the short term. It is unlikely to be adopted before 2026 and the final regime may differ significantly from that currently proposed, both in scope and design.

This means that, in the meantime, Luxembourg will remain the only Member State of the EU without a national merger control regime. As the recent judgment of the CJEU in the Brasserie Nationale/Munhowen case shows, merging companies in Luxembourg will face the risk that their transaction may be referred to the EU Commission under Article 22 of the EU Merger Regulation, if it affects trade between Member States and threatens to significantly affect competition within Luxembourg, instead of having it examined by the Authority.