Thursday, January 15, 2009
Draft Commission Guidelines on the Assessment of Non-Horizontal Mergers: Do They 'Defend' the Efficiency Defence?
Posted by D. Daniel Sokol
Alexandr Svetlicinii, European University Institute - Department of Law asks, Draft Commission Guidelines on the Assessment of Non-Horizontal Mergers: Do They 'Defend' the Efficiency Defence?
ABSTRACT: The Draft Guidelines on the assessment of non-horizontal mergers released by the Commission in February 2007 provides academia, industry and the larger public with an opportunity to comment on the treatment of non-horizontal concentrations under the new substantive test of the 2004 EC Merger Regulation. The Draft Guidelines is one of the continuous steps towards clarification of both substantive and procedural aspects of the reformed EC merger control. One of the issues that was expected to be clarified in the future Non-Horizontal Guidelines is the treatment of the efficiencies and incorporation of the efficiency defence in merger assessment process. As economic theory demonstrates, vertical and conglomerate concentrations are more likely to generate efficiencies that reduce costs and improve production or distribution processes and quality of the products thus ultimately benefiting the final consumer. As the efficiency defence was recognized in principle, but not yet applied by the Commission or Community courts, the future Non-Horizontal Guidelines have special importance in clarifying this legal concept and its practical application. Present work analyses the Draft Guidelines in the light of the preceding administrative guidelines issued by the Commission and recent case law developments in the area of EC merger control. The author submits that the Draft Guidelines fall short of improving the chances of the efficiency defence being effectively applied by the merging parties in view of the increasing standard of proof and judicial review. The article advocates the elaboration of more detailed and specific rules concerning the efficiency defence that would provide the parties with a functioning procedural mechanism giving a chance for efficiency claims to be considered against the alleged competitive harm.