Application of the Nonhorizontal Merger Guidelines

• Date: 01 December 2010
• Author: Raphaël De Coninck
• Published date: 01 December 2010
• DOI: 10.1177/0003603X1005500410
• Subject Matter: Article

Application of the Nonhorizontal

Merger Guidelines

BYRAPHAËL DECONINCK*

On November 28, 2007, the European Commission adopted its first

nonhorizontal merger Guidelines as part of DG Competition’s

implementation of a wider effects-based analysis framework

following criticism by the European courts. The Guidelines

underscore first that nonhorizontal mergers have significant scope

for efficiencies and second that the Commission’s analysis should

focus on whether a transaction is likely to lead to anticompetitive

foreclosure, i.e., foreclosure leading to consumer harm. This article

reviews the Commission’s application of the Guidelines since their

adoption and suggests that the Guidelines have helped focus the

Commission’s analysis on the key questions for the assessment of the

effects of nonhorizontal mergers on consumers. The review of recent

cases presented in this article shows that the Guidelines provide a

flexible framework within which both qualitative and quantitative

economic analysis can be carried out in order to distinguish between

pro- and anticompetitive mergers. Although the Guidelines are not

binding from a legal point of view, this article also observes that they

have served as an effective internal commitment mechanism for DG

Competition.

THE ANTITRUST BULLETIN:Vol. 55, No. 4/Winter 2010 :929

* Member of the Chief Economist Team, Directorate-General for Com-

petition, European Commission.

AUTHOR’S NOTE: The views expressed in this article are solely mine and do not

necessarily reflect those of the European Commission or any other Commission

official.

© 2010 by Federal Legal Publications, Inc.

I. INTRODUCTION

On November 28, 2007, the European Commission adopted its first

nonhorizontal merger guidelines (the Guidelines).1The Guidelines

underscore the primary difference between nonhorizontal and hori-

zontal mergers: nonhorizontal mergers do not entail a direct loss of

competition between the merging parties,2and such mergers have a

large scope for efficiencies.3The Guidelines also underscore that fore-

closure of competitors is not in itself a source of concern; rather, the

relevant question is whether the transaction under review is likely to

lead to anticompetitive foreclosure, i.e., foreclosure leading to con-

sumer harm.4The Guidelines were implemented in response to criti-

cism by the General Court and the Court of Justice of the European

Union of earlier Commission decisions5and are part of DG Competi-

tion’s implementation of a wider effects-based analysis framework.6

This article reviews the Commission’s application of the

Guidelines in nonhorizontal mergers in the two years since their

adoption. This review suggests that the Guidelines have helped focus

the Commission’s analysis on the key questions for the assessment of

the effect of nonhorizontal mergers on consumers. In this regard, the

Guidelines have played a positive role in communicating how the

Commission assesses cases, in order to ensure transparency and to

ease the interaction with outside parties. But perhaps more

importantly, and although the Guidelines are not binding from a legal

930 :THE ANTITRUST BULLETIN:Vol. 55, No. 4/Winter 2010

1Guidelines on the Assessment of Nonhorizontal Mergers under the

Council Regulation on the Control of Concentrations between Undertakings,

O.J. (C 265) 6–25 [hereinafter Guidelines].

2Id. at 12.

3Id. at 13.

4Id. at 18.

5See, e.g., Case C-12/03 P, Comm’n v. Tetra Laval BV, 2005 E.C.R. I-987,

and Case T-210/01, Gen. Elec. v. Comm’n, 2005 E.C.R. II-5575.

6As indicated for instance by the adoption of horizontal merger

guidelines, Guidelines on the Assessment of Horizontal Mergers under the

Council Regulation on the Control of Concentrations between Undertakings,

2004 O.J. (C 31) 5–18, and supported by the creation of the Chief Economist

Team within DG Competition.