Mergers and Merger Remedies in the EU

Mergers and Merger Remedies in the EU

Assessing the Consequences for Competition

Stephen Davies and Bruce Lyons

Headlines are made when the European Commission prohibits a merger, but this is actually very rare. Clearances subject to conditions (i.e. remedies) happen ten times as frequently, but have received far less attention in academic literature. This book provides an empirical assessment of the effectiveness of merger remedies, employing a novel simulation methodology based on formal economic theory. The authors were given unprecedented access to data available to case handlers, concerning a range of remedied mergers covering 21 markets. Using this they have adapted simple simulation techniques to appraise the competitive effects of these mergers and the impact of potential and actual remedies. Ex-ante results are then compared with ex-post impact to examine the actual effectiveness of remedies. The results provide a critique of both simple market share analysis and remedy design. This research thus contributes to economics research and practical merger policy.

Chapter 5: Structure and Competitive Process in Paper and Board Markets

Stephen Davies and Bruce Lyons

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


5.0 INTRODUCTION This chapter provides the background setting for detailed analysis of specific individual merger cases and remedies in what follows. There are seven sections. The first three set the scene: Section 5.1 defines the appropriate NACE broad industry/sector (21), and identifies all merger interventions by the EC over this period; Section 5.2 provides some brief information on broad aggregates and trends, and an assessment of the standing of the European industry in the world as a whole; and Section 5.3 identifies the leading firms. The following four sections turn more specifically to those features of market structure and the competitive process that are likely to influence our choice of oligopoly models. Section 5.4 establishes market definition. Section 5.5 discusses the key features of the product: on the demand side, the nature of the product and product differentiation; on the supply side, costs and technology. Section 5.6 surveys available data on industry structure, notably, leading market shares and concentration. Section 5.7 concludes with a preliminary assessment of the implications for the nature of the oligopoly game and the competitive process.1 5.1 DEFINING THE SECTOR It was agreed with the Commission that this case study sector should be defined as pulp, paper and paper products (NACE 21). Table 5.1 shows the NACE definitions at the 2, 3 and 4-digit levels. There is a clear vertical sequence, running from pulp (21.11), the main input into paper, through paper and board (21.12), to...

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