Mergers, acquisitions and takeovers : The challenges raised within the European context : 20 Years of Experience

Abstract

This contribution aims at studying the fundamental challenges that shape the very essence of the European Merger Control System. In this respect, the core of the thesis relates to the rationale behind enacting a merger control mechanism in the European legal system and the goals that it is meant to achieve. While investigating these issues, the contribution’s recurrent theme gravitates around concepts such as legal certainty, effectiveness and welfare enhancement, principles which are acknowledged to be essential to the generic functioning and development of the European construction and, more particularly, to the appropriate operation of the competition and merger control policies. We have argued that the European Merger Control System embodies a dual purpose: attaining consumer and societal welfare. One has to go beyond assessing the anti-competitive effects that a merger might induce and investigate the different economy-wide effects that concentration transactions and policy approaches may have. Still, the Commission’s practice to date reveals no clear inclination to take societal welfare considerations into account while appraising concentration transactions, thus emphasizing certain conflicts between the goals set by the Treaties and the means used to achieve them. We have debated on which of the two possible methods of assessment, ex-ante or ex-post merger control serves the purpose of attaining consumer and societal welfare best. We concluded that the ex-ante method of control seems more appropriate for fulfilling the societal welfare goal and the ex-post method of control does better when talking about consumer welfare. In the current setup, the ex-ante method may be flawed, due to the limited capacity of grasping the future outlook of essential elements of the market dynamics, the uncertainty which surrounds the concept of standard of proof, the limited possibility of predicting corporate and competitive strategies, the use of assumptions and template test which base their findings on previous market behavioural patterns. The ex-ante method is designed to attain societal welfare; however, we may suggest that it may miss certain essential elements necessary for fulfilling the consumer welfare goal. These elements and features may be provided under an ex-post scheme. We proposed that a reconstruction of the merger control system would seem necessary. On conceptual grounds, we suggested a clear acknowledgment of the societal welfare goal in the Merger Control Regulation’s text and in the Commission’s appraisal process. We proposed a departure from the current approach of sole hard core (a priori) prevention towards a more complex construction entailing lighter ex-ante scrutiny combined with consistent ex-post monitoring. We consider that by contemplating the proposed reforms aimed at a better use of the direct effect concept, private enforcement and consistent efficiency review in an ex-post judiciary setting, the system would be more susceptible to appropriately test the attainment of its goals. Also, a proper concentration transaction follow-up procedure would alleviate the ‘legal certainty realization’ critique and the current system’s inherent prediction shortcomings would be resolved. Thus, the merger control would contribute in a more active and effective manner to the expansion of the European construction.