Assessment of Coordinated Effects in Merger Control: Between Presumption and Analysis

Abstract:     
The first part of the paper, drawing upon modern oligopoly theory, provides an answer to the question concerning the market characteristics that are relevant in assessing coordinated effects arising from mergers (standard of proof). The second part analyzes recent decisions on coordinated effects in the field of EU merger control, in order to draw a conclusion as to the degree of certainty that antitrust enforcers have to reach, before taking a decision prohibiting or authorizing a merger (burden of proof). The cases reviewed include the EU Commission's decision and the related judgment by the Court of First Instance in the Airtours/First Choice case and the EU Commission's decision in Sony/BMG. Since the latter appears, prima facie, radically different from Airtours with respect to the method adopted and the conclusions drawn, the paper also investigates what has changed in the time lapse between the two decisions. I argue that a number of circumstances (the judgments of the Court of First Instance in Airtours, Tetra Laval and Schneider, the adoption of Merger Regulation No. 139/2004 and the cooperation with the US FTC in merger control activity) have affected both the standard of proof and the burden of proof. These circumstances have made the Commission's analysis more economically sound. However, as a downside, the CFI's decisions have also raised the burden of proof on the Commission for prohibiting a merger on the ground of coordinated effects. I conclude that such approach is far too conservative and may result in the undue clearance of mergers, which eventually prove harmful to competition.

Keywords: antitrust, mergers, coordination, oligopoly, Sony, Airtours

JEL Classifications: K21, K42, L13, L49, C71, D43

Working Paper Series