10/9/2020 Oxford University Press | Online Resource Centre | Chapter 18

Marco Colino: Competition Law of the EU and UK 7e

Chapter 18

Instructions
Answer the following questions and then press 'Submit' to get your score.

Question 1
What are the main policy arguments that support the existence of merger control in antitrust regimes?

a) The potential harm faced by firms who do not participate in the merger, and the direct threat to consumers
b) The creation or extension of monopoly power, and increasing the scope for collusion
c) The potential harm firms face when they merge, and the social welfare implications attached to mergers
Question 2
Under merger control, mergers are analysed ex ante, and therefore:

a) it is procedurally similar to the control of dominance

b) the concern is always on actual effects
c) the concern is always on potential effects
Question 3
What is a conglomerate merger?

a) A merger between firms dealing in the same goods or services in the same geographic market
b) A merger between firms which produce different goods or services for one specific finished product
c) A merger between firms which produce products which are not in the same market, but which may be substitutes for each other
Question 4
Why might firms be encouraged to merge?

a) The only reason firms might want to merge is to increase profits

b) Apart from increasing profits, firms might want to grow and operate at a global level
c) There are many reasons for wanting to merge, but maximizing profits is never a goal as mergers are very costly
Question 5
Horizontal mergers:

a) may generate economies of scale and scope

b) are always anti-competitive
c) may never lead to the creation of a monopoly
Question 6
Among the relevant factors highlighted by the Commission in order to determine whether a merger can facilitate oligopolistic collusion are:

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10/9/2020 Oxford University Press | Online Resource Centre | Chapter 18

a) concentration, product homogeneity, symmetry of market shares and costs, and transparency in pricing
b) the ease with which a firm may retaliate to another's competitive action, barriers to entry, inelastic demand, and absence of buyer power
c) both a) and b) are correct
Question 7
When analysing the possibility for collusion as a result of a merger, four stages need to be considered:

a) Firstly, a plausible mechanism whereby collusion can take place must be identified. Secondly, the market must be analysed. Thirdly, it
must be established that those particular features exist in the case under consideration. Fourthly, evidence of past conduct needs to be
considered

b) Firstly, the views of consumers need to be taken into account. Secondly, the mechanisms in place to prevent collusion must be
considered. Thirdly, it must be established that those mechanisms are likely to fail. Fourthly, the merging parties must explain how they
intend to avoid post-merger collusion

c) Firstly, whether there are civil or criminal sanctions for violations of competition law needs to be considered. Secondly, depending on the
gravity of those sanctions, the relevant competition authority will draft a report on the likelihood of collusion. Thirdly, the parties will be
informed and will get a chance to explain their views. Fourthly, if the merger is approved, it will have to be closely monitored for the first two
years of its existence

Question 8
The 'failing firm defence' essentially argues that:

a) a merger which saves a failing firm should not be blocked

b) a merger which saves a failing firm should not be allowed, as it would be inefficient
c) companies only merge when they are going through difficulties so as to 'defend' themselves from competition
Question 9
According to the CC's report into the Safeway merger, (Safeway plc and Asda Group Ltd (owned by Wal-Mart Stores Inc.); Wm Morrison
Supermarkets plc; J. Sainsbury plc; and Tesco plc: A report on the mergers in contemplation, Commission, 5950, September 2003), why could
the failing firm defence not be applied to Safeway?

a) Safeway was unable to meet its financial obligations

b) Safeway was unable to restructure itself successfully
c) Safeway was still competing effectively
Question 10
What is the most important risk of vertical mergers?

a) They might be the first step towards full horizontal integration

b) They might foreclose a market to competition
c) They might bear harmful consequences for the merging firms
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