Thursday, July 19, 2007
Posted by D. Daniel Sokol
In a provacative paper, François Lévêque of Ecole des Mines de Paris - Centre d'Économie Industrielle (CERNA) asks Merger Control: More Stringent in Europe than in the United States? His results are a counter-intuative and lead to some interesting questions for the next stage of research. He finds:
The number of mergers prohibited, cleared with remedies, or abandoned by the parties each year works out at an average of 50 in the USA and 20 in Europe. When these figures are divided by the number of notifications, they produce average percentages of 2.2% and 11% respectively. Does this mean that the European Commission is more stringent than US competition authorities? No, because the notification threshold is higher in Europe than in the USA... The higher proportion of decisions with remedies in the USA is not because there are more US/US mergers than EU/EU mergers but because almost all mergers between European companies are subject to remedies by the FTC or the DoJ. What is the reason for this? This result cannot be construed as direct proof that merger control is more stringent, or more protectionist in the USA. It is possible that EU/EU mergers objectively carry more anticompetitive risks in the USA than US/US mergers in Europe. Competitive conditions may vary considerably from one geographical market to another, and transatlantic mergers are not necessarily a reflection of global markets. It is conceivable, for example, that European companies have a stronger presence in the USA than US companies in Europe. To prove or disprove that the US authorities are more interventionist would require comparing the market shares and concentration of merged companies in Europe and the USA. That is the next question to tackle.