EU ANTITRUST: HOT TOPICS & NEXT STEPS

Prague, Czechia

EU ANTITRUST: HOT TOPICS & NEXT STEPS 2022

6. Efficiency Any horizontal merger can lead to an increase in prices. However, it is difficult to assess to what extent prices may increase. It should be noted that as a result of the merger, the competitive pressure decreases because there is one competitor less on the relevant market. Analysing the competitive effects of a transaction, it should be checked whether it generates efficiency that offsets the negative effects (e.g., higher prices, reduced portfolio, etc.). If the answer is negative, then competition may be distorted. However, the merger could be not blocked. The European Commission can approve the transaction. For that reason, the most important question here is to what extent the efficiency would mitigate the negative effects of the transaction. There is no one answer as each case is different. In practice, it would not be reasonable to assume that the positive effects of a merger must always exceed the negative ones (Levy, 2010). Commission guidelines on the assessment of horizontal mergers allow for the identification of not only static but also dynamic efficiency. However, the initial competition assessment should only focus on static efficiency. Dynamic, on the other hand, should be taken into account in the final phase of the study. This type of efficiency is more difficult to prove and quantify and raises the question of if it is justified to limit the initial assessment of static efficiency as a potential determinant of such concentration, which aims to achieve only dynamic efficiency (Kokkoris, Shelansky, 2014). Although the European Commission Guidelines indicates the grounds for considering efficiency in merger control, there are concerns about its marginalization due to the lack of a solid basis for its assessment (European Commission, 2004). The guidelines do not specify what the efficiency requirement means, but it can be deduced that this concept is directly related to the issue of anti-competitive effects of the planned merger. Attempting to authenticate the achievement of effectiveness is associated with the problem of the need to prove it. The guidelines indicate that efficiency must be achieved in a timely manner and the European Commission does not require that it must be achieved immediately. Efficiency that may be materialized in the future is not taken into account. It is because the later the expected results can be achieved, the more its weight is lowered. However, the European Commission does not set an absolute bar on the timeframe over which efficiency is to be achieved (Johnes, Surfin, Dunne, 2016). The guidelines follow the line of reasoning adopted, inter alia , in in the case of Aerospatiale-Alenia / de Havilland and require that efficiency passes to consumers. However, how much it affects consumers depends mainly on the competitive pressure on a given market and the possibility of entering the market (case Aerospatiale-Alenia / de Havilland ). It is worth mentioning that meeting the efficiency requirements paradoxically undermines the consumer’s welfare, for example by discouraging to a merger (Maier-Rigaud, Parplies, 2009).

433