Applying Domestic Law to International Markets
Chapter 3: Substantive merger law
An assessment of substantive merger law involves consideration both of the relevant legislation and of the way in which that legislation is applied in practice. There are, broadly, two substantive legal tests currently adopted, either exclusively or in combination, to determine whether or not a merger should be allowed to proceed; a competition test ('competition' test) and a market dominance test ('dominance' test). The same test is normally applied regardless of whether the merger is national or transnational in scope, although the practical application of the law may vary where international factors are involved. The broad convergence of substantive law, particularly in countries with relatively mature merger laws, is not surprising given the similarity of the stated policy objectives for merger regulation among member countries, most commonly the protection of consumers through the preservation of competition. This is the case even where these stated objectives mask some underlying differences in philosophy. Beyond established regimes, such as those represented by OECD countries, broad level convergence has been facilitated by information exchanges and guidelines developed by international bodies such as the ICN and UNCTAD, which inform the development of new merger regimes. Nevertheless, despite the apparent 'paper' convergence of substantive law and philosophy, differences remain in the true nature and strength of merger regulation, either because of the adoption of different analytical approaches or because weak enforcement practices in some countries render the laws of more limited effect.
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