European Merger Control

European Merger Control

Do We Need an Efficiency Defence?

Edited by Fabienne IIzkovitz and Roderick Meiklejohn

This book examines the background to a change in the legal framework which occurred in May 2004 with the entry into force of a new Merger Regulation that for the first time explicitly recognises the possibility of an efficiency defence. European Merger Control assesses the likely impact of this new regulation, and discusses the pros and cons of the efficiency defence, how other merger control systems deal with efficiencies, how the investigation process can be organised to accommodate the analysis of efficiency gains and the main theoretical and practical problems which arise when anti-competitive effects have to be weighed against efficiency gains.

Introduction

Edited by Fabienne IIzkovitz and Roderick Meiklejohn

Subjects: economics and finance, competition policy, industrial economics, law - academic, competition and antitrust law

Extract

For 15 years, the EU’s merger control system, unlike most others in the world, offered only minimal possibilities for taking efficiency gains into account as a mitigating factor that might offset the anti-competitive effects of a merger. This changed in January 2004, when the EU Council of Ministers adopted a new merger regulation that for the first time explicitly recognizes the possibility of an efficiency defence. Shortly afterwards, the European Commission published its first guidelines for the assessment of horizontal mergers, explaining how it intends to apply the new regulation. In Part VII of the guidelines, the Commission outlines how efficiencies will be incorporated into merger appraisals. What are the pros and cons of the efficiency defence? How do other merger control systems deal with efficiencies? What impact will the change in policy have on merging companies and the economy as a whole? How can the investigation process be organized to accommodate the analysis of efficiency gains? What are the main theoretical and practical problems which arise when anti-competitive effects have to be weighed against efficiency gains and how can they be resolved? This book aims to answer these questions or at least to indicate fruitful lines of further enquiry. Although the old merger regulation included ‘the development of technical and economic progress’ among the criteria to be considered in the appraisal of mergers, it also stipulated that such progress could be taken into account only if it was...