EU's executive arm mulls more merger review powers

BRUSSELS, June 18 (Reuters) - European Union antitrust regulators are looking to boost their powers to review mergers in the region but may run into resistance from some EU governments more interested in creating national champions. The European Commission and national competition authorities now divide jurisdiction over mergers and takeovers in the 27-country EU based on the size of the turnover of the companies involved.

However, under a so-called "two-thirds rule", national regulators and not the Commission review cases in which companies make more than two-thirds of their sales in that country.

Of the 126 cases that fell under this rule between 2001 and 2008, a number of mergers were cleared based on public interest factors rather than competition policy, giving rise to competition concerns, the Commission said in a report on Thursday. "Against this background, the present form of the two-third rule merits further consideration," the EU executive said.

Experts said Gas Natural's (GAS.MC: Quote, Profile, Research) failed takeover of Endesa (ELE.MC: Quote, Profile, Research) in 2007, which was reviewed by Spanish authorities and not the Commission because both companies made the bulk of their sales in Spain, underlined potential problems in the two-thirds rule. "The Commission may feel that it is the best placed authority to review certain mergers especially if it relates to the creation of national champions," said Catriona Hatton at law firm Hogan & Hartson.

The Commission could face a tough battle, she said.

"I don't think member states will give up their powers so easily," Hatton said.

The Commission said it might present proposals to revise the notification thresholds. Any changes would have to be approved by EU ministers. (Reporting by Foo Yun Chee; Editing by Dale Hudson)