Horizontal mergers that raise competition concerns may require divestitures that eliminate the identified concerns. At the same time, divestitures should be proportionate, not going above and beyond what is necessary to eliminate the identified concerns. In this article, we argue that in differentiated product markets out-of-market substitutes exert stronger competitive pressure on some products within the relevant product market than on others. As a result, a divestiture of products that are subject to strong competitive pressure from out-of-market substitutes may not be needed if other products that are subject to weaker competitive pressure are divested. A simplistic solution that requires divestitures in all areas of horizontal overlap could result in overly broad remedies that violate the proportionality principle.
Contributor Notes
Dr. Oliver März and Dr. Nicola Tosini are respectively Consultant and Director in the Antitrust and Competition Practice of NERA Economic Consulting Berlin, Germany. This work draws on their experience advising the merging parties in merger control proceedings before the European Commission. The opinions expressed reflect the authors’ views and do not necessarily reflect the views of their employer.
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