By Brandon Mitchener
The Wall Street JournalJune 4, 2002
European Competition Commissioner Mario Monti told the Confederation of British Industry Tuesday that the commission is warming to the notion of so-called efficiency arguments in the context of reviewing mergers.
Companies often argue that their deals benefit consumers. Competitors often warn that the deal would do just the opposite. In the past, the commission has been accused of withholding regulatory approval for deals that create or strengthen a dominant position in a given marketplace even if the deal did promise potential benefits to consumers.
Now, Mr. Monti, the first economist to act as EU competition commissioner, is promising to put the emphasis of merger reviews on the economics of a case. "I have said this before, but let me clarify it once and for all," he said. "The commission does not rely on the fact that efficiencies resulting from a merger are likely to have the effect of reducing or eliminating competition in the relevant market — for example, by enabling lower prices to be charged to customers — as a ground for opposing a proposed transaction."
Among other changes, the commission also plans to increase the penalties for companies that fail to comply with its requests for information during the course of a merger review and allow companies to "stop the clock" on a five-month deadline for a decision in order to flush out suggested remedies to antitrust objections. It may also change the way it holds hearings in order to allow companies to defend their mergers orally before the commission formalizes objections to the deal.Mr. Monti hasn't made up his mind on everything. He has yet to decide whether the commission should distance itself from its controversial "dominance test" in favor of the "substantial lessening of competition" test used by the U.S. "We are not wedded to the current wording, and have no prejudice in favor of one formulation or another," he said. "What matters is the effectiveness of the legal instrument."
Some antitrust lawyers say the commission's ban on
allowing the creation or strengthening of a dominant position is more rigid than
the U.S. test, and results in more deals being blocked. The commission disputes
that finding, but has said it is willing to consider changing the test, which is
applied in all merger reviews.
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