Saturday, January 17, 2009
Posted by D. Daniel Sokol
Christopher Bright (Shearman & Sterling) and John Schmidt (Shepherd and Wedderburn) discuss Financial Strength as a Relevant Criterion in EC Merger Analysis: A Search for Meaning in a new article.
ABSTRACT: The concept that a firm's economic or financial strength may confer or enhance market power found its way into European merger control largely as a result of the German influence in formulating the original dominance test. In the past, Commission has used financial strength only tentatively, as a plus factor in problematic cases, but without robustly defining either the concept or the situations in which it gives rise to competitive harm. Financial strength seems nevertheless to have withstood the Commission's maelstrom of reforms. Whether this happened by design or accident is unclear. In examining past Commission practice, we seek to identify common strands and meaning in the Commission's approach, before concluding that the concept remains as a vague remnant of the ECMR's ordoliberal origins and should have no place in the world of modern merger analysis.