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.

Chapter 5: Efficiencies in Merger Control

Jrissy Motis, Damien Neven and Paul Seabright

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


5. Efficiencies in merger control Jrissy Motis, Damien Neven and Paul Seabright In a lecture in the Beesley series, Paul Seabright observed, on the occasion of the tenth anniversary of EU merger control, that little was known about the source of efficiencies in mergers (Seabright 2002). In that lecture, he also put forward a simple framework for consideration on the motivation behind mergers, as a particular form of corporate restructuring, and the source of synergies between merging partners. In this chapter, we report on some of the work that we have undertaken on synergies and the source of efficiencies in mergers. We outline the framework that we have developed for thinking about mergers, summarize some of the empirical evidence that we have gathered and discuss the insights that the framework yields into the role of competition authorities. This work provides some confirmation that the reallocation of intangible assets is a significant motivation for mergers and a source of merger-specific efficiencies. With respect to the role of competition authorities, we will suggest that they should systematically ask about the activities that can only be undertaken through the proposed merger and seek evidence from the merging parties about the plans that they have developed to integrate their activities. We will also suggest that synergies are of particular importance compared to technical efficiencies because the latter are, in principle, achievable by means other than a merger and, if in practice they are not likely to...

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