Commercial Law

7. Mergers

Riccardo Ghetti
www.riccardoghetti.it
Mergers

1. Introduction
2. The EU Merger Regulation Regulation + book

3. Effects of mergers - “concentration”

- Union dimension
4. Reasons for mergers - one-stop merger control
- referrals
5. Purposes of merger control - notification
- suspension
6. EU merger control: structure - enforcement
- review
7. EU merger control: content
1. Introduction

- Merger, general notion: two or more

undertakings forming a new legal entity

- EUMR notion: possibility of exercising decisive

influence (= concentration)

- Technically, merger < concentration

2. The EUMR

- Regulation 139/2004 on Concentrations: read!

- Applicable to mergers having EU dimension

- Pre-notification system with the Commission

2. Merger regulation

- Merger activity happens in waves

- Merger regulation is spreading

- Concentrations are dangerous for competition

3. Effects of mergers

When a merger takes place between actual

or potential competitors in the same product
- Horizontal effect and geographic markets and at the same
level of the production or distribution cycle

Where a merger occurs between firms that

- Vertical effect operate at different, but complementary,
levels of the market for the same final product

Where a merger does not have a vertical or

- Conglomerate effect horizontal effect but is nonetheless capable of
restricting competition in different, even
unrelated markets
4. Reasons for mergers

- Economies of scale
- Economies of scope
- Other efficiencies
- National champions
- Management efficiencies
- Exiting industries
- Greed, vanity, fear and drugs
- Increasing market power
5. Purposes of merger control

| No:
| preserving
| competitive
- Same effect of 102? | markets

- Difficult because forward looking…

- … thus having strong teoretical underpinnings

5. Theories
A merges with competitor B: AB will exercise
market power à if prices increase customers
- Unilateral effects have no alternative because A and B merged

A merges with B: AB will be better able to

- Coordinated effects coordinate its behaviour on the market with
other firms, thus exercising collective market
power

Vertical mergers might diminish competition if it

- Vertical effects forecloses other firms from entering the market or if the
integration makes it more likely that there will be
coordinated effects on the market

- Conglomerate effects Extremely controversial

6. EU merger control: structure

- Mergers need a Union dimension

- Pre-notification

- Vetting resulting in clearance/prohibition

 Riccardo Ghetti

www.riccardoghetti.it

www.unibo.it