Who’s Afraid of Conglomerate Mergers?

Abstract

Conglomerate merger control went out of fashion in the United States and the European Union several decades ago. Both jurisdictions embraced the premise that non-horizontal mergers should normally be considered benign because exclusionary theories of harm are economically implausible, and non-horizontal mergers are almost always certain to result in significant efficiency effects that the merged entity can be expected to pass on to consumers. Conglomerate effects analysis subsequently all but disappeared from the enforcement practice. However, the emergence of a handful of powerful digital platforms with vast global ecosystems of interconnected services is currently causing competition agencies a great deal of concern. Their growth has not been entirely internal. Collectively, Alphabet, Meta, Apple, Amazon and Microsoft have acquired over 800 companies. Many of their targets were innovative start-ups operating in complementary markets. This contribution compares and critically assesses how this development has affected the US, EU and UK competition agencies’ approach to conglomerate merger control. It finds that, as a reaction to the advent of Big Tech, conglomerate effects analysis has made a significant comeback in EU merger control. While the US and UK authorities have not yet intervened against any conglomerate acquisitions in practice, evidence suggest that they are also more open to non-horizontal theories of harm again.

Keywords: merger control, conglomerate effects, tying, leveraging, digital platforms, consumer welfare, competitive process, Digital Markets Act (DMA)

JEL Classification: D42, D43, K21, K42, L41, O30