Merger Control

The competition reforms brought about by the Enterprise and Regulatory Reform Act 2013 have intentionally overlooked the uncertainties that still engulf ‘public interest mergers’ in the UK. The Secretary of State retains a residual power to propose new public interest exceptions and there is speculation of what form these new interests could take. This note alludes to some of the proposals for new public interest criteria and considers the implications of these on the future of UK merger control.

The Forth Railway Package approved in 2016 in order to remove remaining obstacles to complete the Single European Rail Area aims, inter alia, to boost competition by adapting the system of governance between railway infrastructure managers and service operators. However, in this respect, reality shows us a scenario away from those objectives and dominated by a few operators. This paper aims to analyze the causes of this situation and to propose ways of improvement. To this end, it focuses on a key aspect of the liberalization process of the sector, such as the area of market relations between railway infrastructure managers and transport service operators. The study is approached from the perspective of EC Competition law, with particular reference to rules applicable to merger control.

RESUMEN. El cuarto paquete ferroviario aprobado en 2016 con el fin de eliminar los obstáculos que quedan para completar el espacio ferroviario único europeo tiene por objeto, entre otros, impulsar la competencia adaptando para ello el sistema de gobernanza entre los gestores de las infraestructuras ferroviarias y los operadores de servicios. Sin embargo, a este respecto, la realidad nos muestra un panorama alejado de esos objetivos y dominado por unos pocos operadores. Este trabajo tiene por objeto analizar las causas de esa situación y proponer vías de mejora. Para ello se centra en un aspecto clave del proceso de liberalización del sector, como es el ámbito de las relaciones de mercado entre los administradores de infraestructuras ferroviarias y los operadores de los servicios de transporte, cuyo estudio se aborda desde la perspectiva del derecho comunitario de defensa de la competencia, con especial referencia al control de las concentraciones económicas.

El derecho de la competencia, al que los norteamericanos llaman derecho antimonopolístico (en inglés Antitrust Law), puede describirse como el conjunto de normas jurídicas que pretenden regular el poder actual o potencial de las empresas sobre un determinado mercado, en aras del interés público. En la práctica el derecho de la competencia prohíbe la realización de prácticas restrictivas de la competencia, la adquisición de una posición de dominio en el mercado a través de la realización de dichas prácticas y el abuso de la posición dominante.

El presente documento contiene una aproximación al análisis de una de las premisas fundamentales de esta disciplina, según la cual, los mercados en competencia producen mayores beneficios a la sociedad que los mercados con estructuras monopólicas. Para el efecto, analizaremos los orígenes, evolución y finalidad del derecho de la competencia, las dificultades prácticas que deben enfrentar las autoridades de la competencia específicamente las latinoamericanas y también las críticas que se han formulado en contra de las normas que desarrollan el derecho de la competencia. Para tal efecto se exponen los siguientes temas: 1) Orígenes y evolución del derecho de la competencia en Estados Unidos de América, la Unión Europea, América Latina y el Caribe. 2) Aspectos económicos del derecho de la competencia. 3) Los mercados competitivos y los mercados monopólicos. 4) Críticas al derecho de la competencia. 5) Los retos para las autoridades de la competencia latinoamericanas.

__________________________________________________________

Antitrust law can be described as the set of legal rules that regulate the current or potential power of the companies on a certain market, on behalf of public interest. In practice, antitrust law prohibits the execution of restrictive competition practices, the acquisition of a dominant position in the market through the accomplishment of these practices and the abuse of the dominant position.

This document is an approach to the analysis of one of the fundamental premises of this discipline, which states that the markets in competition produce greater benefits to society than the markets with monopolistic structures. In this order, we will analyze the origins, evolution and purpose of the Antitrust Law, the practical difficulties that the competition authorities must face particularly the Latin American authorities, and also the criticisms that have been formulated against the laws that develop Antitrust. For this is purpose the following subjects are exposed: 1) Origins and evolution of the Antitrust Law in the United States of America, the European Union, Latin America and the Caribbean. 2) Economic Aspects of the Antitrust Law. 3) Competitive markets and monopolistic markets. 4) Criticisms to the Antitrust Law. 5) The challenges for the Latin American competition authorities.

The German Parliament (Deutscher Bundestag) held a hearing in its Economic Committee on 27 June 2018, based on the motion "Stopping market concentration in the agricultural market - preserving biodiversity and food sovereignty". This motion takes the European Commission's conditional approval of the merger between Bayer and Monsanto as an opportunity to raise fundamental concerns regarding competition law.

The text is a translation of the written expert opinion, prepared for the Parliamentary Hearing (with very few amendments). It answers five questions that address the topics of the motion. Citations were primarily taken from German sources.

Recently, the European Commission has conditionally authorized the Microsoft acquisition of LinkedIn by imposing a number of remedies to address the competition problems, mainly in the shape of foreclosing effects, that are expected to stem from the transaction in the market for professional social network services. From what can be inferred from the press release published on its site competition website, it appears that to vet the Microsoft/LinkedIn merger the Commission may have followed a stricter approach than its past decisional practice concerning digital markets mergers.

The article briefly discusses the issue of application of public interest considerations in merger control. Only selected jurisdictions allow public interest to play a role in merger control. However, the enforcement models and applicable procedures differ a lot among countries. More coherence may be observed in relation to types of public interest considerations present in national statutes and case law. The annex presents selected case law on application of public interest in merger control worldwide.

In a world where goods and services (but also people, capital and ideas) are increasingly ignoring national borders, competition policy has emerged as a highly salient issue at the heart of international trade discussions. Aspects of competition policy, from cartels and monopolies to state aids and the liberalization of the utilities, have become a regular feature in the pages of the financial and legal press and have become identified as a central element in any government's policy towards industry and its drive for competitiveness. This article focuses on European Union merger control and although appreciative of the dominance of economics and law in competition policy, stresses the political dimension to competition policy. A government and public administration perspective is essential. This is in evidence in the type of regime, the commitment to enforcing the law, the role of discretion and issues such as transparency and democracy. The example of merger control is used to illustrate how the European Commission (EC) has emerged and operates as a genuinely federal actor in determining and shaping merger policy throughout the EU. In short, this article accounts for policy development, the decision making process and in particular the degree to which discretion and politicization underpin one of the most crucial aspects of economic regulation.

The increase of data-driven M&A transactions have raised apprehension over potential violations of data privacy rights. The economic significance attributed to Big Data has also called into question whether data privacy could be a parameter in merger control proceedings. Our purpose is to address the privacy and monopoly concerns arising from data-driven transactions within the scope of both the EC Regulation and the purpose limitation principle under the GDPR.

Este artículo examina las principales novedades institucionales y de gestión pública relacionadas con el control de concentraciones empresariales en Colombia durante el período 2013-2017. El artículo identifica y discute en detalle cuatro desarrollos ocurridos durante el período de estudio, relacionados con: i) cooperación internacional, ii) estabilidad institucional, iii) transparencia del proceso y iv) tendencias sobre decisiones de objeción y condicionamiento. Además, se presentan algunos retos en la implementación del control, así como alternativas que pueden ser pertinentes para el contexto colombiano.

This paper studies the role of structural remedies in merger control in a Cournot setting where (endogenous) mergers are motivated by prospective efficiency gains. Every merger has to be submitted to an Antitrust Authority (AA) which, apart from blocking or unconditionally approving it, might approve a modified version of the concentration where divestitures are required. Some important merger policy implications can be drawn. First, when divestitures are required, the AA over-fixes, i.e., goes beyond the recreation of the level of competition that existed prior to the transaction. Second, by insisting in overfixing, the AA may discourage firms to look for more efficient mergers. Finally, structural remedies are shown to open up new merger opportunities to firms.

Article 102 enforcement in pharmaceutical sector, in which competition law interferes with intellectual property rights, is one of the most complex competition analysis. Complications of the sector, namely its importance for public health, dependency on costly R&D and to be subject to divergent regulations around the EU, are considered to clarify more Article 102 enforcement in the sector. In regard to influence of the sector on public health and vague boundaries between IP law and Competition Law, more circumspect enforcement is suggested. In addition, this article argues that non-harmonised regulation scheme of the sector is one of the main hurdles of Article 102 enforcement. Therefore, harmonisation in the sector regulations as well as IP laws of the EU is advised. Moreover, based on the fact that there is a lack of substantial case law about Article 102 enforcement in the sector, there is a need for more clarified case law and explanatory guidelines. In this respect, prospected ...

En este artículo los autores analizan los umbrales de notificación en el control de concentraciones empresariales desde una perspectiva conceptual y práctica atendiendo a su desarrollo en la doctrina, la legislación comparada y las guías orientativas de distintos países e instituciones para así presentar una visión completa y didáctica sobre la materia

Przedmiotem artykułu jest analiza zjawiska umiędzynarodowienia procesów kontroli koncentracji przedsiębiorców. Rozpoczyna go krótka prezentacja założeń
publicznoprawnej interwencji w koncentrację przedsiębiorców w gospodarce. Następnie wskazane zostały przyczyny intensyfikacji i rozwoju współpracy międzynarodowej w sprawach koncentracji. Zjawisko to stanowi fenomen ostatnich lat i wciąż pozostaje aktualne, co wywołuje wiele interesujących zagadnień z zakresu prawa antymonopolowego. Kolejno przedstawiona została ogólna klasyfikacja forów i środków współpracy międzynarodowej w sprawach kontroli koncentracji. Stworzyło to odpowiednie ramy do omówienia najważniejszych instytucji, organizacji
i innych środków wykorzystywanych do współpracy międzynarodowej w sprawach kontroli łączenia przedsiębiorców.

This paper develops a stochastic differential game framework for analyzing strategic exercise of options. We focus on research and development (R&D) competition in information technology (IT) investment projects with technical and market uncertainty. According to the theory of real options and game theory, uncertainty generates an option value of delay which can be diminished by the threat of competition. An important feature of the IT projects is that the firms make investment decision on an ongoing basis before the success of the R&D process. Consequently, repeated strategic interactions may facilitate self-enforcing tacit collusion on R&D. We explore the possibility of defining a collusion (cooperative) equilibrium based on the use of a trigger strategy with an information time lag. When the information time lag is long, a preemptive (noncooperative) equilibrium emerges in which the option values of delay are reduced by competition. When the information time lag is sufficiently short, a collusion equilibrium emerges in which investment is delayed more than the single-firm counterpart. An analysis of the equilibrium exercise policies of firms provides a potential explanation for several otherwise puzzling innovation market phenomenons. We also analyze the role of uncertainty on the likelihood of tacit collusion on R&D and provide implications of strategic effects for antitrust and merger control policies.

This article is motivated by a growing interest in the problem of merger control quality assessment. Remedies are one of the instruments of merger control and have a significant influence on the results of it. This paper aims to build and empirically evaluate a discrete choice model of merger remedies implementation in Russian merger control. The database consists of 443 merger cases accepted by the Russian antimonopoly agency between 2008 and 2011. We analyze the agency's decisions and try to find which characteristics of merging firms and markets lead the Federal Antimonopoly Service to decide whether to allow conditional acceptance. We find that variables related to high market power lead more frequently to a remedy outcome. Such industries as the energy sector, communications and insurance positively affect the probability of a structural remedy. We do not find significant effects of «non-structural» variables, such as the world leader and the nationality of the firm-buyer.

This paper introduces the Werden-Froeb Index (WFI) to assist in evaluating merger-specific efficiencies in horizontal mergers. The index measures the weighted average reduction in marginal costs required to restore pre-merger equilibrium prices and quantities after the (full or partial) merger is consummated. The WFI is well defined, objective and robust, and it has relatively low information requirements. We propose to

Response to BIS Committee Industrial Strategy Inquiry (September 2016).

Link to Inquiry page: https://www.parliament.uk/business/committees/committees-a-z/commons-select/business-innovation-and-skills/inquiries/parliament-2015/industrial-strategy-16-17/

Merger control authorities may approve a merger based on a so-called "efficiency defence". An important aspect in clearing mergers is that the efficiencies need to be merger-specific. Joint ventures, and in particular research joint ventures (RJVs), may achieve comparable efficiencies possibly without the anti-competitive (market power) effects of mergers. We present evidence for the semiconductor industry that RJVs indeed represent viable alternatives to mergers. We empirically account for the endogenous formation of mergers and RJVs.

The contemporary strength of EU competition policy does not stem naturally and mechanically from the Treaty of Rome, nor is it only a consequence of the spread of ‘neoliberal’ ideas or the single market programme. It is also the product of decades of dynamics underlined by historical institutionalism, which allowed the Commission to secure decisive powers, despite the unwillingness of some of the most powerful Member States. In this regard, the two most important cornerstones were Regulations 17/62 on cartels and 4064/89 on mergers. The Commission benefited from the unintended consequences of decisions taken in the Council and from the path dependencies created by Regulation 17/62. It progressively developed a centralized institutional framework with itself at the centre.

This paper analyses the formulation of the EU Merger Control Regulation (MCR) and its implementation via the 1992 Nestlé/Perrier merger. It offers two arguments. First, these phases of policy development occurred in 'macro' and 'micro' policy communities found at the supranational level of governance. The first community consists of larger Commission and business interests that formulated the MCR and the second of specific actors within the 'macro' community -the Merger Task Force and the firms -that implemented the rules. Secondly, the development of these communities can be explained by private interest theory. The conclusions highlight two main lessons for students of comparative European politics. First, the concept of 'macro' and 'micro' communities existing at both the formulation and implementation phases of policy offers a framework for comparativists to better analyse which types of actors will interact during different stages of the policy-making process. It is argued that while the (larger) 'macro' community helps define the nature of the regulations, a related, but not necessarily equally composed, 'micro' community eventually implements the rules, potentially changing the nature of the policy itself via a 'feedback' mechanism. Secondly, this study suggests that comparativists must pay more attention to the private interests of policy-makers and how these are intertwined with their 'private fears.' Such interests and fears guide policy-makers while simultaneously constrain them from acting alone.

We construct a model of endogenous mergers and study some issues of whether and how to control mergers, taking into account firms equilibrium response to policy. Anti-competitive mergers benefit competitors more than the merging firms. We show how such free-riding reduces firms incentives to merge (holdup). Firms delay merger proposals, hoping other firms will merge instead. The final result, however, is an overly concentrated market. Merger control may thus preserve competitive markets. In the presence of holdup, even reasonable policies such as requiring divestiture or using cost-benefit analysis, may be worse than not controlling mergers at all. D

Using a sample of 167 mergers during the period 1990-2002 involving 544 firms either as merging firms or competitors, we contrast a measure of the merger's profitability based on event studies with one based on accounting data. We find positive and significant correlations between them when using a long window around the announcement date and, for rivals, in case of anticompetitive mergers.

In their merger control, EU and the US have considered symmetric size distribution (cost structure) of …rms to be a factor potentially leading to collusion. We show that forbidding mergers leading to symmetric market structures can induce mergers leading to asymmetric market structures with higher risk of collusion, when …rms face indivisible costs of collusion. In particular, we show that if the rule determining the collusive outcome has the property that the large (ef-…cient) …rm bene…ts su¢ ciently more from collusion when industry asymmetries increase, collusion can become more likely when …rms are moderately asymmetric.

In their merger control, EU and the US have considered symmetric size distribution (cost structure) of firms to be a factor potentially leading to collusion. We show that forbidding mergers leading to symmetric market structures can induce mergers leading to asymmetric market structures with higher risk of collusion, when firms face indivisible costs of collusion. In particular, we show that

In the wake of recent convergence initiatives, many countries now adopt a competition-based approach to merger control assessment. Given the emphasis that is placed on competition criteria in these assessments, the influence of wider ‘public interest’ criteria has become increasingly marginalised. Yet despite this marginalisation, many merger regimes continue to afford scope to public interest criteria – which poses a number of questions regarding the feasibility of further convergence internationally. This paper conducts an empirical study of 75 domestic merger regimes to draw two sets of insights. Firstly, the paper identifies the different means by which states have chosen to accommodate public interest criteria within their domestic merger laws. It finds that most states will: (i) treat the public interest as an ‘exception’ to a competition-based test or frame it within sector-specific policy, and (ii) assign decision-making powers to either a national competition authority or a politician. Secondly, the paper explores the socio-economic factors that may influence how a state choses to accommodate public interest criteria. Statistical analysis suggests that factors traditionally thought of as influential (such as economic development) have only a negligible correlation with the chosen method of accommodation. In contrast, the ‘effectiveness’ of domestic governance within a state appears to demonstrate a significant correlation with how states choose to frame public interest criteria within legislation.

This paper applies a novel and intuitive approach based on stock market data to a unique dataset of large concentrations during the period 1990-2002 to assess the effectiveness of European merger control. We analyze the economic effects of the European Commission's merger control decisions and distinguish between prohibitions, clearances with commitments (either behavioral or structural), and outright clearances. We run an event study on merging and rival firms' stock prices to quantify the profitability effects of mergers and merger control decisions. The basic idea is to relate announcement and decision abnormal returns: merger control is effective if anticompetitive rents observed around the merger announcement are reversed by the antitrust decision, i.e. if there is a negative relation between announcement and decision abnormal returns. Our findings suggest that only outright prohibitions completely solve the competitive problems generated by the merger. Remedies are on average not effective in solving anticompetitive concerns, yet, we can qualify this finding. Remedies are more effective when they are applied during the first rather than the second investigation phase. Moreover, the European Commission appears to learn over time, since remedies are on average more effective in industries where they have been intensively applied before.

We construct a model of endogenous mergers and study some issues of whether and how to control mergers, taking into account firms equilibrium response to policy. Anti-competitive mergers benefit competitors more than the merging firms. We show how such free-riding reduces firms incentives to merge (holdup). Firms delay merger proposals, hoping other firms will merge instead. The final result, however, is an overly concentrated market. Merger control may thus preserve competitive markets. In the presence of holdup, even reasonable policies such as requiring divestiture or using cost-benefit analysis, may be worse than not controlling mergers at all. D

Response to Competition Commission South Africa's follow-up consultation on the revised draft guidelines for the assessment of public interest provisions in merger assessments under section 12A of the Competition Act No.89 of 1998. (Submitted: February 2016).