Brussels

Mergers & remedies: How to assess efficient remedies?

Law & Economics workshop organized by Concurrences in partnership with Willkie Farr & Gallagher.

ECONOMIC ANALYSIS IN REMEDIES DISCUSSIONS

Kai-uwe Kühn (Chief Economist, European Commission, DG Comp)

Mr. Kühn brought an economic perspective on the question of remedies’ efficiency. economics has two roles regarding the assessment of the efficiency of remedies: assess their adequacy to the theory of harm, and assess their viability (as to their implementation, and as to the possibility for the divested business to effectively compete in the future).

In this perspective, Mr. Kühn studied three recent merger cases (deutsche börse/nySe, ryanair/ aer lingus and UPS/TNT), in which he identified the economic reasons for the commission to reject the commitments proposals. the prohibition can result from the fact that the remedies do not properly address the theory of harm: for example, in the deutsche börse/ nySe case, the access remedy proposed by the parties was too restrictive, leaving high barriers to entry on the market, and thus did not address the theory of harm. The commission has also prohibited mergers when the remedies proposed were not viable, for example when the proposed buyer was unlikely to be able to run the business on the long term. this is the main reason for the prohibition in the ryanair/aer lingus case. mr. Kühn then highlighted that, on the contrary, if remedies are well designed to appropriately meet the theory of harm, parties can obtain clearance from the commission with lighter commitments. In the Syniverse/mach case, a divestment of contracts and transfer of personnel was considered as sufficient; there was no need to commit to a full divestment. Finally, Mr. Kühn raised procedural questions.

Photos © Emilie Gomez

Access to this article is restricted to subscribers

Already Subscribed? Sign-in

Access to this article is restricted to subscribers.

Read one article for free

Sign-up to read this article for free and discover our services.

 

Speakers