LAW AND ECONOMY - EUROPEAN MERGER REGULATION - EFFICIENCY CLAIMS - CUMULATIVE CONDITIONS - VERIFIABILITY - SPECIFICITY - BENEFIT TO CONSUMERS - - LITTLE COMPETITIVE MARKETS - SAVINGS ON FIXED COSTS - BUYER-POWER - COST REDUCTIONS - PRESUMPTIONS

Will efficiencies ever matter in merger control ?

While the new European merger regulation makes explicit room for efficiencies, they almost never sway the decision in practice. To some extent, this is because the need to prove that the three cumulative conditions- verifiability, merger-specificity and benefit to consumers - are met is a tough requirement. But this difficulty is compounded by the prevalence of three views which reduce competition authorities’ receptiveness to efficiency claims, and which we believe to be mistaken. These views are (i) the idea that efficiencies cannot benefit consumers in little competitive markets, (ii) the idea that savings on fixed costs never benefit consumers, and (iii) the idea that buyer-power induced cost reductions are irrelevant. More balanced presumptions would likely improve the treatment of efficiency claims.

1. According to the new European merger regulation and the Guidelines on the assessment of horizontal mergers under the Council Regulation on the control of concentrations between undertakings (hereafter, the “European Guidelines”), merger-driven efficiencies can be considered a positive element in the overall assessment of mergers if the following three conditions are cumulatively met, with the burden of proof lying on the merging parties : the efficiency gains must be verifiable, merger-specific, and a significant fraction thereof should be passed on to consumers. This approach is very close to those prevailing in many other jurisdictions, including the United States and national competition authorities within Europe. 2. While efficiencies had been discussed in some decisions under

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Auteur

  • Paris School of Economics

Citation

David Spector, Will efficiencies ever matter in merger control ?, décembre 2007, Concurrences N° 4-2007, Art. N° 14366, pp. 20-26

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