Assessing the Consequences for Competition
1. Mergers and remedies in the EU: an overview 1.0 INTRODUCTION Mergers constitute a major potential means of restructuring, allowing a more eﬃcient allocation of resources as market conditions and ﬁrm-speciﬁc capabilities change over time. This can enhance the competitiveness of the merging ﬁrms, leading to increased competition within the industry concerned and improved competitiveness of the industry on the world stage. Potentially, both consumers and producers can ultimately gain from that restructuring. However, mergers may also dampen the competitive process, by reducing the number of eﬀective competitors, by softening competition, by impeding entry, and by reducing the incentives to innovate. This can harm both domestic consumers and international competitiveness. The focus of this research is on the remedies that the European Commission sometimes requires before clearing prospective mergers. First note that 90 per cent of merger proposals falling within the Commission’s scrutiny are allowed without any conditions. Headlines are made when a merger is prohibited, but this has happened only 19 times in 17 years, during which time over 3000 mergers have been appraised. Clearances subject to conditions (that is, remedies) happen over ten times more often, yet they have received far less attention both in the popular press and in the academic literature. In broad terms, a remedy is an intervention designed to avoid the anticompetitive consequences, while not impeding the hoped-for eﬃciency gains from the merger. Unlike prohibitions, remedies are far more complex than a simple yes/no decision by the Commission. They require...
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