EU ANTITRUST: HOT TOPICS & NEXT STEPS

EU ANTITRUST: HOT TOPICS & NEXT STEPS 2022

Prague, Czechia

competition in the online advertising market as other competitors were likely to exert significant competitive pressure after the merger ( Google/ DoubleClic ). Certain mergers, e.g., those in the market of everyday goods, need to be analyse not only from the supply side, but also from the demand point of view. It means that the assessment of if the merger will significantly distort effective competition, it should be checked whether the power of buyers will be strengthened (Argentesi, Buccirossi, Calvano, Duso, Marrazzo, Nava, 2020). The European Commission may examine the countervailing power of the merging parties’ customers. Buyers are assumed to have sufficient strength to counterbalance the market force of merged entities, especially if there are options to change supplier. The idea to evaluate countervailing buyer power arose in the 1988 Coca-Cola/Carlsberg case when the European Commission considered whether there was sufficient customer purchasing force to counteract the parties’ market power (case Enso/ Stora ). However, in this case it found no such force. The countervailing power of buyers was, however, the decisive factor in the European Commission’s decision in the Stora/Enso case. The merger resulted in the creation of the world’s largest manufacturer of packaging for liquid products, with a market share of over 60%. However, 60–80% of market demand came from one company – Tetra Pack. The European Commission accepted that Tetra Pack’s countervailing power forced the combined entity to maintain its prices at least for Tetra Pack at the current level in order to prevent Tetra Pack from switching to another supplier. Despite other factors showing a dominant position of the combined entity, the European Commission agreed the merger provided that the combined companies did not raise prices for other customers above the level established for its main customer, Tetra Pack. In addition, in the ABB/BREL case, the European Commission allowed the merger despite high market shares partly because of the significant power of the customers (case Alstom/ABB ). This decision concerned the railway equipment market where products were particularly tailored to buyers’ specifications. Moreover, demand was volatile due to large contracts and the tendency of buyers to switch supplier from year to year. There was no risk of price raise and other negative economic effects on the market. The transaction did not adversely affect economic efficiency either. Because of these factors transaction was allowed. Potential competition is seen as an element of effective competition if potential competitors could exert significant competitive pressure after the merger. However, a full assessment of the merger also requires an examination of the effectiveness of the transaction.

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