Voigt / Schmidt Making European Merger Policy More Predictable

1. Auflage 2005
ISBN: 978-1-4020-3090-1
Verlag: Springer-Verlag
Format: PDF
Kopierschutz: Adobe DRM (»Systemvoraussetzungen)

E-Book, Englisch, 200 Seiten

Making European Merger Policy More Predictable analyses European Merger Control with regard to its capacity to generate predictability among the concerned parties. Starting from the premise that predictability is of overwhelming importance for the functioning of market economies, Voigt and Schmidt ask to what degree European Merger Control has been predictable over the last couple of years. The authors show both theoretically and empirically that there have been serious shortcomings with regard to the predictability of competition policy. They identify the insufficient recognition of the consequences of globalization on the competitive processes as well as an often inconsistent application of economic theory as the root causes for the lack of predictability. The inconsistent application of economic theory is particularly relevant with regard to potential competition and the evaluation of collective dominance. The authors generate a substantial number of proposals that could help to improve predictability. On this basis, Voigt and Schmidt critically assess the recent reforms of European Merger Control.

Autoren/Hrsg.

Voigt, Stefan

Schmidt, André

Inhaltsverzeichnis

1;TABLE OF CONTENTS;5
2;PREFACE;11
3;CHAPTER I PREDICTABILITY AS A CRUCIAL CONDITION FOR ECONOMIC GROWTH AND DEVELOPMENT;12
3.1;1. INTRODUCTORY REMARKS;12
3.2;2. SOME THEORETICAL CONSIDERATIONS CONCERNING PREDICTABILITY;12
3.3;3. SOME EMPIRICAL RESULTS CONCERNING PREDICTABILITY;14
3.4;4. THE PREDICTABILITY OF EUROPEAN MERGER POLICY;16
3.4.1;4.1. A Survey Amongst Large European Firms;19
3.4.1.1;4.1.1. Before Notification;20
3.4.1.2;4.1.2. After notification;21
3.5;5. PROPOSALS FOR IMPROVING PREDICTABILITY;22
4;CHAPTER II DEVELOPMENTS IN COMPETITION THEORY;24
4.1;1. INTRODUCTORY REMARKS;24
4.2;2. THE HARVARD APPROACH;24
4.2.1;2.1. Main Points;25
4.2.2;2.2. Policy Implications;27
4.2.3;2.3. Critique;27
4.3;3. THE CHICAGO APPROACH;29
4.3.1;3.1. Main Points;29
4.3.2;3.2. Policy Implications;31
4.3.3;3.3. Critique;32
4.4;4. CONTESTABILITY THEORY;33
4.4.1;4.1. Main Points;33
4.4.2;4.2. Policy Implications;35
4.4.3;4.3. Critique;35
4.5;5. THE CONTRIBUTION OF GAME THEORY: THE NEW INDUSTRIAL ORGANISATION;35
4.5.1;5.1. Game Components;36
4.5.2;5.2. Advantages of Using Game Theory in Competition Theory;36
4.5.3;5.3. Critique Concerning the Use of Game Theory in f Competition Theory;38
4.6;6. THE CONTRIBUTION OF THE NEW INSTITUTIONAL ECONOMICS: TRANSACTION COST ECONOMICS;39
4.6.1;6.1. Transactions and Transaction Costs;40
4.6.2;6.2. Assumptions of Transaction Cost Economics f;41
4.6.3;6.3. Policy Implications;43
4.7;7. IN LIEU OF A SUMMARY: CONSENSUS AND DISSENSUS BETWEEN THE VARIOUS APPROACHES;45
5;CHAPTER III TRENDS IN THE BUSINESS ENVIRONMENT;50
5.1;1. LIBERALISATION AS A DRIVING FORCE OF GLOBALISATION;51
5.1.1;1.1. General Trends;51
5.1.1.1;1.1.1. Liberalisation within nation-states;52
5.1.1.2;1.1.2. Liberalisation by regional integration;53
5.1.1.3;1.1.3. Liberalisation on a worldwide scale;53
5.1.2;1.2. Sector-Specific Liberalisation;54
5.1.2.1;1.2.1. Liberalisation of goods markets;54
5.1.2.2;1.2.2. Liberalisation of capital markets;55
5.1.2.3;1.2.3. Facilitation of Foreign Direct Investment;55
5.1.2.4;1.2.4. Liberalisation of service markets;56
5.2;2. ECONOMIC AND TECHNOLOGICAL FACTORS;56
5.2.1;2.1. Rapid Technological Change;56
5.2.2;2.2. Increasing Mobility of Supply;57
5.2.3;2.3. Developments in Transport Costs;57
5.2.4;2.4. The Internet;58
5.2.5;2.5. Homogenisation of Preferences;60
5.2.6;2.6. Rapid Change of Consumption Patterns;61
5.3;3. CONCLUSIONS;61
6;CHAPTER IV POSSIBLE CONSEQUENCES OF TRENDS IN THEORY (B) AND DEVELOPMENTS IN BUSINESS (C) FOR COMPETITION POLICY;64
6.1;1. INTRODUCTION;64
6.2;2. FROM MARKET DEFINITION TO ASSESSING DOMINANCE;65
6.2.1;2.1. The Standard Approach;65
6.2.1.1;2.1.1. The relevant product market;66
6.2.1.2;2.1.2. The relevant geographic market;67
6.2.1.3;2.1.3. Defining relevant markets in practice: the hypothetical monopolist test;68
6.2.1.4;2.1.4. Predicting the post-merger structure;68
6.2.1.5;2.1.5. Assessing Single Dominance;69
6.2.2;2.2. Consequences of Recent Theoretical Developments;71
6.2.3;2.3. Consequences of Recent Trends in Business Environment;72
6.2.4;2.4. Current EU Practice;74
6.2.4.1;2.4.1. The Relevant Product Market;74
6.2.4.2;2.4.2. The Relevant Geographic Market;77
6.2.4.3;2.4.3. Assessing Dominance;79
6.2.5;2.5. Proposals Towards Enhancing Predictability;82
6.2.5.1;2.5.1. Simple Tools;83
6.2.5.2;2.5.2. Improvements Due to Theoretical Developments;90
6.2.5.3;2.5.3. Improvements Due to Trends in the Business Environment;97
6.3;3. A CLOSER LOOK AT BARRIERS TO ENTRY AND CONTESTABILITY;98
6.3.1;3.1. The Standard Approach;98
6.3.2;3.2. Consequences of Recent Theoretical Developments;102
6.3.3;3.3. Consequences of Recent Trends in the Business Environment;104
6.3.4;3.4. Current EU Practice;105
6.3.5;3.5. Proposals Towards Enhancing Predictability;108
6.4;4. ASSESSING COLLECTIVE DOMINANCE;111
6.4.1;4.1. Standard Approach;113
6.4.2;4.2. Recent Theoretical Developments;115
6.4.3;4.3. Recent Trends in the Business Environment;119
6.4.4;4.4. Current EU Practice;121
6.4.5;4.5. Reform Proposals;124
7;CHAPTER V CASE STUDIES;130
7.1;1. ASSESSMENT OF BARRIERS TO ENTRY IN EUROPEAN MERGER CONTROL: THE CASES OF VOLVO/SCANIA, MERCEDESBENZ/ KÄSSBOHRER, AND MAN/AUWÄRTER;131
7.1.1;1.1. Barriers to Entry in the Case of MERCEDES-BENZ/KÄSSBOHRER;131
7.1.2;1.2. Barriers to Entry in the Case of VOLVO/SCANIA;133
7.1.2.1;1.2.1. The Market for Heavy Trucks;133
7.1.2.2;1.2.2. The Market for Buses;134
7.1.3;1.3. MAN/AUWÄRTER;135
7.1.4;1.4. Economic Assessment;136
7.2;2. ASSESSMENT OF BARRIERS TO ENTRY IN EUROPEAN MERGER CONTROL: THE CASES OF SCA/METSÄ TISSUE AND SCA HYGIENE PRODUCTS/CARTOINVEST;140
7.2.1;2.1. Barriers to Entry in SCA/METSÄ TISSUE;140
7.2.2;2.2. Barriers to Entry in SCA HYGIENE PRODUCTS/CARTOINVEST;142
7.2.3;2.3. Comparison of the Decisions;143
7.2.4;2.4. Economic Assessment;143
7.3;3. ASSESSMENT OF BARRIERS TO ENTRY IN EUROPEAN MERGER CONTROL: THE CASE OF BASF/BAYER/HOECHST/DYSTAR;147
7.3.1;3.1. Barriers to Entry in the Case of BASF/BAYER/HOECHST/DYSTAR;148
7.3.2;3.2. Economic Assessment;149
7.4;4. THE ASSESSMENT OF BARRIERS TO ENTRY IN EUROPEAN MERGER CONTROL: THE MARKETS FOR TELECOMMUNICATIONS IN THE CASE OF TELIA/TELENOR;150
7.4.1;4.1. The Special Conditions for Entry in the Markets for Telecommunications;151
7.4.2;4.2. The Case of TELIA/TELENOR;153
7.4.3;4.3. Assessment of the Decision;155
7.5;5. COLLECTIVE DOMINANCE UNDER THE EUROPEAN MERGER REGULATION;157
7.5.1;5.1. NESTLÉ/PERRIER (1992);157
7.5.2;5.2. KALI&SALZ/MDK/TREUHAND (1993);160
7.5.3;5.3. GENCOR/LONRHO (1996);161
7.5.4;5.4. EXXON/MOBIL (1999);163
7.5.5;5.5. AIRTOURS/FIRST CHOICE (1999);165
7.5.6;5.6. UPM-KYMMENE/HAINDL and NORSKE SKOG/PARENCO/WALSUM (2001);168
8;CHAPTER VI PRACTICAL PROPOSALS;172
8.1;1. INTRODUCTORY REMARKS;172
8.2;2. OVERVIEW OF SUBSTANTIVE PROPOSALS AS DEVELOPED IN CHAPTER IV;172
8.3;3. PROCEDURAL PROPOSALS;177
8.4;4. CONCLUSIONS AND OUTLOOK;186
9;APPENDIX;188
10;ENDNOTES;192
11;REFERENCES;196
12;INDEX;202

Leseproben

CHAPTER V

CASE STUDIES (p.119)

This chapter describes the concrete decision-making of the European Commission, based on a number of cases, and subsequently evaluates the Commission’s approach from an economic point of view. Based on these specific cases, we consider to what degree the actual decision-making diverges from the procedures generated in the last chapter. The discussion of the cases serves to identify weaknesses and inconsistencies. It thereby illustrates the many possibilities for improving European merger policy. At centre stage are cases concerning barriers to entry and collective dominance/ coordinated effects. It is in the nature of case studies that not all pertinent cases are discussed, but only a sample. Some criteria guiding the selection of cases are therefore needed. Here, two criteria are paramount: some cases were chosen because they seemed to display great similarities either with regard to the relevant markets or with regard to the competitive concerns stated by the Commission. The second criterion was that the cases displayed some sort of precedent effect, and could have been instrumental in shaping the decision-practice in more than just the specific case under scrutiny.

Cases in which barriers to entry played an important role are discussed first. The Commission has been called on to analyse more than one merger involving the markets for buses and heavy trucks. It was decided to look at some of these cases because prima facie the issues analysed seem very similar. The cases dealt with in some detail are MERCEDES-BENZ/KÄSSBOHRER; VOLVO/SCANIA and MAN/AUWÄRTER. Furthermore, two cases dealing with tissue products are also discussed (SCA/METSÄ TISSUE and SCA HYGIENE PRODUCTS/CARTOINVEST).

Additionally, the case BASF/BAYER/HOECHST/DYSTAR has been included because in this case, the Commission delineated the global market as the relevant geographic market due to an absence of barriers to entry. Finally, the increased relevance of telecommunications services and the particular conditions present in these markets make a specific assessment of these markets necessary, and hence the decision in TELIA/TELENOR is discussed with regard to the role of potential competition.

In the second part of the chapter, the most important decisions with regard to collective dominance/coordinated effects will be analysed. These are the cases concerning NESTLÉ/PERRIER, KALI&SALZ/MDK/TREUHAND, GENCOR/LONRHO, EXXON/MOBIL, AIRTOURS/FIRST CHOICE, UPM-KYMMENE/HAINDL, and NORSKE SKOG/PARENCO/WALSUM.

1. ASSESSMENT OF BARRIERS TO ENTRY IN EUROPEAN MERGER CONTROL: THE CASES OF VOLVO/SCANIA, MERCEDESBENZ/ KÄSSBOHRER, AND MAN/AUWÄRTER

In March 2000, the European Commission declared the merger between VOLVO and SCANIA, two Swedish manufacturers of trucks and buses, as incompatible with the Single Market because their combined operations would create or strengthen a market dominant position in the markets for heavy trucks and buses. Five years earlier, in spite of considerable increases to market shares in the German bus market, the Commission had declared the acquisition of KÄSSBOHRER by MERCEDES-BENZ as compatible with the Single Market with reference to potential competition, which would lead to a progressive opening of the German market. Although both cases are concerned with the same, or at least similar, markets, in assessing barriers to entry the Commission reaches different conclusions: while in MERCEDES-BENZ/KÄSSBOHRER, the Commission considers barriers to entry into the German bus market as not sufficiently high, in VOLVO/SCANIA, when considering the Scandinavian markets, it reaches the opposite conclusion. The following case study scrutinises the decisions of the Commission.