EU ANTITRUST: HOT TOPICS & NEXT STEPS

Prague, Czechia

EU ANTITRUST: HOT TOPICS & NEXT STEPS 2022

2003). However, if there is competition, it will limit the propensity to raise prices. The same effect occurs when market entry barriers are small, and the risk of new entry increases the competitive pressure among existing competitors. For this reason, in order to determine the impact of a merger on competition in the common market, it is appropriate to take into account potential competition (European Commission, 2004). 5. Potential competition Potential competition means that a company, not present in the relevant market, but which may enter it in a relatively short time and thus puts pressure on another company (European Commission, 2004). Potential competition is important in analysing the competitive effects of a merger for two reasons. First, if the merging parties are potential competitors prior to the concentration, the merger will eliminate competition and the likelihood of coordinated or unilateral effects will increase. If the merger leads to the restriction of potential competition – it may significantly distort effective competition within the meaning of the Regulation 139/2004. Second, potential competition (for example, where entry is likely) can have the ability to limit anticompetitive behaviours of merged companies and may reduce the concerns of the competition distortion. These are considerations that may indicate that there will be no restriction of competition. If the market is protected by entry barriers, the level of competitive pressure from a potential entrant is limited. The higher the entry barriers, the less potential for competition. Potential competition refers not only to the possibility of a newundertaking entering the market, but also to the prospect of new competition from undertakings already competing or operating in closely related product markets, e.g., companies offering the same product or service in a different geographic market or current competitors with the ability to increase production. Potential competition may limit the market power of merged entities. This manifests itself in the ratio of the probability that the potential competition will become the actual competition ( Mannesmann/Vollourec/Ilva ). The European Commission in its assessment of the viability of a potential competitor on the market, examines whether a potential competitor is likely to enter, whether it would be significant from the competition point of view and whether it would be effective, and it examines the timeframe for such entry. Potential competition must enter the market quickly enough to discourage others to use market power. There is no specific time limit within which entry must take place, but the European Commission normally specifies a period of two to three years. In the Google/DoubleClick case, the European Commission concluded that the elimination of DoubleClick as a potential competitor would not adversely affect

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