Competition Law and Anti-Trust: Horizontal Mergers

Vocabulary flashcards covering key terms and definitions from the lecture notes on horizontal and non-horizontal mergers, plus related doctrines and case references.

Merger control

Process under competition law that assesses proposed mergers to prevent creation or strengthening of market power; usually ex ante and often handled by a single competition authority.

Non-coordinated effects

Unilateral effects where a merger removes competition constraints, potentially increasing market power and reducing rivalry without any explicit agreement.

Coordinated effects

Post-merger coordination among firms in a market that can harm customers by raising prices or reducing output, even without formal collusion.

Section 7 of the Clayton Act (US, 1914)

US law prohibiting acquisitions that may substantially lessen competition or tend to create a monopoly.

EU Regulation 4064/89

EU merger regime originally governing concentrations, later replaced by Regulation 139/2004; focuses on preventing dominance through mergers.

EU Regulation 139/2004

EU merger regulation that replaced 4064/89, introducing updates like the dominance-based test and efficiency considerations.

UK Enterprise Act 2002

UK merger regime establishing powers to intervene in mergers on competition grounds.

Dominance

A position of substantial market power allowing a firm to behave to a significant extent independently of competitors and customers.

AKZO presumption

EU criterion where a market share of 50% or more is strong evidence of dominance in merger control.

Article 102 TFEU

EU treaty provision prohibiting abuse of a dominant position by a company.

Market share (dominance threshold)

Indicators of dominance; 50%+ shares typically raise strong presumptions of dominance; other thresholds (e.g., above 40%) may also indicate concerns.

Non-coordinated effects factors

Factors considered: market shares, closeness of competition, switching opportunities for customers, capacity constraints, hindering third-party expansion, presence of a Maverick firm.

Maverick firm

An independent, often aggressive competitor that can discipline a merger by offering strong competitive constraints.

Bridgestone/Bandag case

A merger example discussed for factors suggesting competition concerns, such as small shares increase with strong competitors and lack of switching opportunities.

T-Mobile Austria/Tele.Ring case

Case illustrating concerns from a merger that could create symmetric leading firms and impact switching.

Airtours case

EC case used to discuss collective dominance; characteristics like capacity planning, demand volatility, and market transparency affect findings.

Efficiency defence

Justification for a merger based on potential efficiency gains that benefit consumers, subject to conditions.

Consumer benefit (efficiency defence)

Efficiencies claimed by a merger must translate into real benefits for consumers.

Merger specificity

Efficiency gains must arise specifically from the merger and be tied to its structure.

Verifiability

Claimed efficiencies must be capable of being verified and demonstrated as credible.

Falling firm defence

Defense allowing a merger if the target would fail or exit the market absent the transaction, reducing anti-competitive concerns.

Olympic case (falling firm)

Illustrative case used to discuss the falling firm defence and its stringent criteria.

Horizontal mergers

Mergers between direct competitors; raise concerns about market power and potential unilateral or coordinated effects.

Vertical mergers

Mergers between firms at different levels of the supply chain; can cause input or customer foreclosure.

Conglomerate mergers

Mergers across unrelated product markets; may enable tying or bundling to foreclose rivals.

Input foreclosure

Foreclosing or restricting access to inputs for downstream rivals after a merger.

Customer foreclosure

Foreclosing upstream rivals by tying or securing access to key downstream customers.

Foreclosure

A reduction in a rival’s ability to compete by limiting access to inputs or markets due to a merger.

Bundling/Tying

Selling two or more products together or tying one product to another to foreclose rivals or gain market power.

Microsoft/Skype case

Illustrative vertical/conglomerate tying case examining potential foreclosure and platform effects on competing apps/services.

Safe harbours (Horizontal Merger Guidelines)

Guidelines providing lower-risk thresholds: market shares below 30% and HHI below 2,000.

Market concentration

Degree to which a market is dominated by a few firms, often measured by market shares or HHI.

Market transparency

Clarity and availability of market information, which can affect the likelihood of coordination.

Vertical arithmetic

Profitability analysis in vertical foreclosure decisions: upstream vs downstream margins and potential foregone profits.