How to Give a Meaningful Interpretation to the Efficiency Defence in European Competition Law?

Posted by D. Daniel Sokol

Pal Szilagyi, Competition Law Research Centre, Peter Pazmany Catholic University asks How to Give a Meaningful Interpretation to the Efficiency Defence in European Competition Law?

ABSTRACT: The role of the efficiency defence in competition law, particularly in European Union competition law was always heavily debated since the adoption of the first merger regulation in the European Community, later the European Union. According to the current interpretation of the notion of dominance by the ECJ it is not possible to justify a merger creating or strengthening a dominant position based on efficiency justification. Moreover, the structural presumptions underlying the system of merger control prevail in such situations. If the merged undertaking does not have a dominant position, efficiency gains can outweigh the harm to competition on the condition that the benefits reach the consumers. This approach is not only consistent with past case law, but is also reflecting the traditions of the Harvard- and Freiburg Schools. Oligopoly theory suggests that concentration on the market is a very relevant factor and this is reflected in the SIEC test.