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See version in english International Merger Policy. Applying Domestic Law to International Markets, Julie CLARKE

BIBLIOGRAPHIE : CLARKE Julie, Edward Elgar, 2014, 320 p.

International Merger Policy. Applying Domestic Law to International Markets, Julie CLARKE

Julie Clarke

As there is no international organization or treaty governing the way in which transnational mergers should be regulated from an international antitrust perspective, this book intends to provide a comparative assessment of domestic merger control laws and procedures through identified themes. It also intends to detail the current legal instruments of international cooperation, especially on the basis of the work of the OECD and the ICN. Noteworthy, the author develops interesting ideas to improve current regulations in order to reduce the cost burdens associated with transnational merger review.

Although surprisingly devoid of almost any case-law references, it does not mean that this book is too theoretical as the author has clearly identified the main aspects at stake for those practitioners who are used to dealing with transnational mergers subject to review by a large number of antitrust agencies in various jurisdictions. Antitrust practitioners and researchers will find in this book clear, accessible, and well-organized comparative developments on the way transnational mergers are regulated in a large number of jurisdictions, and not only on US/EU aspects (for a detailed review on US/EU aspects, see S.A. Vandergrift and J.J. Lucas, The GE/Honeywell Saga ? Ehh, What’s Up, Doc ? A comparative approach between US and EU merger control proceedings almost 15 years after, [2014] 35 ECLR 172). Helpful and extensive references are made to the OECD’s formal recommendations, commissioned reports, and regular roundtables (pp. 182-188) along with the ICC Recommendations to OECD on international merger control best practices (p. 185), and the ICN’s Eight Guiding Principles for Merger Notification and Review, Recommended Practices for Merger Notification Procedures, and Recommended Practices for Merger Analysis (pp. 188-216). The final chapter, which deals with proposals for reform, is certainly a must-read.

Theoretical framework for merger law and policy

In the first chapter, the author presents a normative analysis of the approach that ought to be taken to merger regulation from both a domestic and a global perspective. The readers will find an interesting study of the policy objectives of merger control regulations, especially regarding traditional and modern consumer welfare theories. Regarding merger regulation, specifically within the context of Premerger Notification (PMN) systems, a number of criteria should be observed in order to avoid unnecessary and inappropriate costs to the parties. According to Ms. Clarke, merger regulation must be capable of identifying and preventing most anti-competitive mergers prior to consummation. The cost of this regulation should not exceed the cost of allowing anti-competitive mergers to proceed, on the one hand, and what is necessary to identify and prevent those mergers having likely anti-competitive effects. In addition, the cost of complying with this regulation should not be such as to unduly burden parties to those mergers which are unlikely to have any anti-competitive effects. Last but not least : merger control regulations should be clearly stipulated and be capable of operating within a commercially realistic and predictable time-frame.

Substantive merger law

After having explained the substantive merger tests that have been implemented so far—the competition test and the dominance test—the author identifies key sources of convergence and divergence in the analytical approach for transnational merger review, including : the role of market definition, market share, and concentrations, the theories of harm applied to assess competitive effects, the relevance of one of the firms being a failing firm or a maverick, the role of barriers to entry, buyer power, and the role of efficiencies in merger analysis. According to the author, the two key areas in which there remains greater divergence related to the role of market definition and efficiencies.

Merger review procedure

In a very interesting chapter, the author compares merger control proceedings in several jurisdictions (e.g. USA, EU, Australia, China) as for several key issues such as : structure and powers of the local antitrust agencies, including the role of the courts of justice, notification requirements (i.e. thresholds, timetable, administrative fees, forms and requested information), process and time schedule for assessment, transparency of decision-making, confidentiality issues and negotiation of remedies. Particular attention is also given to the limited number of jurisdictions which implement a voluntary system of notification (e.g. Australia, Chile, New Zealand, Venezuela, and the United Kingdom). The author discusses the pros and cons of such a voluntary system (pp. 94-104), particularly in the case of smaller economies. Ms. Clarke accurately points out that : “the effectiveness of voluntary regimes [depends] upon the consequences of failure to adhere. For example, the high notification rate in Australia arguably results from the potentially high penalties for failure to notify combined with the reputation of the authorities as willing to vigorously pursue those mergers which raise anti-competitive concerns and are not notified.”

Merger remedies

The author emphasizes the role of remedies, analyzes the different types of remedies imposed by the antitrust agencies and compares their approaches. She points out a clear preference for structural remedies and concludes accurately her study by pointing out that “agencies should coordinate consideration of remedies with other interested jurisdictions to ensure consistency and avoid unnecessary overlap.” This position echoes some of the more recent decisions, especially in the hard-disk drive industry. In Seagate/Samsung in 2011, the Chinese MOFCOM imposed significant remedies which contrasted with the unconditional approvals granted by the EU (see European Commission, Seagate/HDD Business of Samsung, Case COMP/M.6214, Decision of 19 October 2011) and US agencies.

Extraterritorial application of national laws

The chapter on extraterritorial application of national laws details the funding principles which govern the extraterritorial application of competition laws, and especially within the context of transnational merger review.

The role of comity and cooperation

In a dedicated chapter, the author discusses the extent to which comity (within the meaning of the author, comity could be defined broadly as the consideration given by regulators and the judiciary to the laws and interests of other nations when applying their domestic regulations, see p. 13) has impacted national merger enforcement proceedings and the nature of cooperation. The author goes on to explain the role of current bilateral and multilateral agreements to promote convergence and convergence. Special and careful attention is given to the intergovernmental work of the OECD since the 1960s (pp. 182-188) and the cooperation between antitrust agencies via the ICN from the date of its creation in 2001 (pp. 188-216).

The cost of transnational merger regulation

The author identifies the significant costs related to the current regulation of transnational mergers for the parties, antitrust agencies, and the consumers. As accurately stated by the author, “the cost of transnational merger regulation on transaction presenting little, if any, competitive concerns are currently unreasonably and unnecessarily high.”

Proposal for rationalization

In order to reduce the existing costs and to maximize consumer welfare, the author points out that various possibilities have been proposed in the past two decades. However, “outside the EU (…) supranational options for transnational review seem unlikely and in most cases undesirable.” The recent supranational merger control regime implemented by the Common Market for Eastern and Southern Africa (COMESA) Competition Commission since the beginning of 2013 is a good example to illustrate how difficult it is to implement a supranational system.

Proposals for reform

The author calls for reform. She interestingly suggests some priorities for the future direction of transnational merger review. According to the author, the OECD Council should adopt a new targeted recommendation on several aspects : e.g. translation requirements, notification thresholds, timing of notification, fee waiver for initial notification, time limits for premerger review, transparency, theories of harm, and coordination of agency reviews. The author also pays a great tribute to the work of the ICN and UNCTAD for their support to develop and implement best practices and facilitate dialogue between jurisdictions.

This is a very helpful comparative study of the context of antitrust regulations on transnational mergers.

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Author

Quotation

Josselin J. Lucas, International Merger Policy. Applying Domestic Law to International Markets, Julie CLARKE, September 2014, Concurrences Review N° 3-2014, Art. N° 67997, pp. 243-249

Editor Edward Elgar

Date 30 June 2014

Number of pages 338

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