Is There a Future for an Efficiency Defence in European Merger Control?

46 Pages Posted: 4 Feb 2016

Date Written: November 20, 2015

Abstract

Since 2004, EU merger control guidelines state the Commission will consider efficiencies as a part of its evaluation. We show evidence that despite the guidelines, current EU regulatory practice contains no effective efficiency defence. We investigate empirically all EU merger control decisions from 1991 to 2014, with an emphasis on Article 8 decisions since 2004. Parties have raised efficiency arguments only 21 times since 2004. In fact, the Commission appears slightly more likely than the parties to raise efficiency arguments. Efficiency defence cases represent only 3% of all cases but 31% of Article 8 cases. In critical cases, however, efficiency arguments appear to never have been decisive in Commission practice. We discuss the reasons for this scarcity. To successfully raise an efficiency defence, parties would need to show the merger specificity of efficiencies, show the efficiencies flow to consumers, and show the efficiencies affect variable costs in addition to fixed costs. Meeting this high standard has so far appeared impossible. The parties may currently feel raising efficiency issues signals weakness in the rest of their argument. We raise the possibility of requesting mandatory disclosure of a limited set of efficiency arguments in order to get started on regulatory evaluation of merger efficiencies. We discuss the advantages and disadvantages of such an approach.

Keywords: Efficiency defence, merger control

JEL Classification: K21, G34

Suggested Citation

Kuoppamäki, Petri and Torstila, Sami, Is There a Future for an Efficiency Defence in European Merger Control? (November 20, 2015). Available at SSRN: https://ssrn.com/abstract=2727171 or http://dx.doi.org/10.2139/ssrn.2727171

Petri Kuoppamäki

Aalto University ( email )

P.O. Box 21210
Helsinki, 00101
Finland

Sami Torstila (Contact Author)

Aalto University ( email )

P.O. Box 21210
Helsinki, 00101
Finland
+358 40 353 8069 (Phone)

Register to save articles to
your library

Register

Paper statistics

Downloads
88
Abstract Views
554
rank
290,202
PlumX Metrics