The European Commission has demonstrated in recent cases in dynamic and innovative industries that it is willing to undertake competitive assessments well into the future and hence subject to significant uncertainty.
Under these circumstances, it is however not entirely clear how the future competitive landscape will look like, merger effects cannot be modelled with a high degree of precision, and it is actually possible for harmful merger effects to materialize later than pro-competitive merger effects.
In this article by CRA’s Svend Albaek and Daniel Donath, they suggest two changes that should be made to the EU Horizontal Merger Guidelines to better cope with these relatively frequent industry settings.
- First, the revised Guidelines should in line with the new Market Definition Notice broaden its concept of “potential competitor” to also cover firms that are investing, for instance in R & D, in order to enter a market but may neither be able to enter easily nor in a relatively short period of time following a costly investment.
- Second, both harm and efficiencies should be subject to the same “standard of proof,” and any harm should be appropriately discounted if it happens far enough in the future in favor of the efficiencies that may be more imminent.
To learn more about the proposed changes to the EU Horizontal Merger Guidelines by Svend Albaek and Daniel Donath, you can explore their detailed analysis and recommendations here.
