1. Buyer power can be defined as a buyer's ability to obtain good terms from its suppliers by virtue of its size. Even though competition policy is in principle concerned with the possibility that large firms' power distort price determination and the efficient functioning of markets, be it in their capacity as sellers or as buyers, competition authorities are in practice much less concerned about the exercise of buyer power than about the exercise of market power by sellers, and they often tend to view buyer power favourably. This is chiefly because buyer power is often seen as a factor countervailing upstream sellers' market power. 2. Merger control policy must deal with buyer power in two sets of situations. In the case of seller mergers, a question that sometimes arises is
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LAW & ECONOMICS: BUYER POWER - MERGER CONTROL - COMPETITIVE IMPACT - BILATERAL BARGAINING - BUYER MERGERS - SELLER MERGERS
Addressing buyer power in merger control
While competition authorities often take countervailing buyer power into account when assessing the competitive impact of a merger between sellers, they have so far been more reluctant to consider positively the creation or strengthening of buyer power resulting from a merger. This paper summarises the main economic mechanisms underlying the existence of market power, distinguishing between anonymous market interfaces and markets characterized by bilateral bargaining. It then draws implications for merger control, considering both buyer mergers and seller mergers.
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