Do We Need an Efficiency Defence?
Edited by Fabienne IIzkovitz and Roderick Meiklejohn
Chapter 2: European Merger Control: Do We Need an Efficiency Defence?
2. European merger control: do we need an eﬃciency defence? Fabienne Ilzkovitz and Roderick Meiklejohn Since the end of 1990, the European Commission has had speciﬁc powers to control mergers with a Community dimension under the merger regulation.1 This system of merger control at the Community level was created because globalization and the dismantling of non-tariﬀ barriers in the Single Market resulted in major corporate reorganizations in the Community, particularly in the form of cross-border mergers. Such restructuring is welcome if it enables ﬁrms to exploit the new opportunities created by a wider market and enhances their eﬃciency. However, mergers can also be a means to increase market power. The control of mergers at the Community level must therefore ensure that those mergers which do not enhance eﬃciency and which may distort competition in the Community are forbidden. However, the 1989 merger regulation was traditionally interpreted as requiring mergers to be judged on the basis of their anti-competitive eﬀects alone and does not allow eﬃciency gains to be used to justify mergers which would otherwise be unacceptable. In January 2004 the Council of Ministers adopted a new merger regulation.2 Amongst other things, the new regulation changes the criteria (the substantive test) for deciding whether a merger should be permitted or forbidden and provides a somewhat ﬁrmer legal basis for the consideration of eﬃciency gains than existed in the old regulation. These aspects of the new regulation are described in Section 2.1 of this...
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