The Reform of EU Merger Control - Fundamental Reversal or Mere Refinement?

Abstract

EU Merger Control is currently undergoing its most profound reform to date, central to which is the more economic approach. This chapter gives a comprehensive overview of the legislative and non-legislative changes including a description of the historical background. On this basis, a preliminary assessment is made, thereby highlighting remaining problems and open questions. The new Merger Control Regulation, which entered into force on May 1, 2004, brought inter alia changes in jurisdiction, procedural modifications and a shift in the prohibition criterion from market dominance to significant impediment to effective competition (SIEC). The new criterion receives concrete form in the likewise new Horizontal Merger Guidelines. As a general tendency, concepts from modern industrial organization theory as well as sophisticated econometric estimations are increasingly used. On the non-legislative side the Competition Directorate-General was reorganized and the position of Chief Competition Economist established. Taken together the evidence suggests that the new more economic approach represents a fundamental reversal rather than a mere refinement of EU Merger Control. While the intended improvement of the economic underpinnings is welcomed in principle, the detailed scrutiny of its effects yields differentiated results. Administrative costs are found to rise and predictability to decline, whereas the effects on decision quality remain ambiguous. In addition, institutional aspects such as the growing participation of economic experts, the potential for political interventions and the separation of functions merit attention. Taken together a more comprehensive view of a more economic approach is necessary. From this perspective superior courses of action can be inferred, such as the establishment of an independent competition authority and the stronger orientation of merger control to (more) general rules.

Keywords: merger control, anticompetitive effects, efficiencies, separation of functions, economic experts

JEL Classification: F2, K21, L4