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Unbundling GE/Honeywell: The Assessment of Conglomerate Mergers Under EC Competition Law - Chapter 9 - International Antitrust Law & Policy: Fordham Corporate Law 2001
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International Antitrust Law & Policy: Fordham Corporate Law 2001 - Hardcover International Antitrust Law & Policy: Fordham Corporate Law 2001 - PDF ___________________________________________________________________________________ Preview Page Chapter 9
UNBUNDLING GE/HONEYWELL: THE
ASSESSMENT OF CONGLOMERATE
MERGERS UNDER EC COMPETITION LAW
Go¨tz Drauz†
I. INTRODUCTION
Conglomerate mergers are mergers between firms that have no existing or
potential competitive relationship either as direct competitors or as suppliers
and customers. Most frequently, conglomerate mergers involve suppliers of
complementary products or of products belonging to a range that is generally
sold to, and requested by, the same set of intermediate or final customers.
It is generally claimed that because conglomerate mergers do not result
either in direct horizontal overlaps or in vertical relationships, they should be
viewed as having a positive or at least neutral effect on competition. Whilst it
can be reasonably accepted that conglomerate mergers may not be anticompetitive
per se, the conglomerate aspects of mergers may constitute an
additional factor, either aggravating or mitigating, to existing horizontal
and/or vertical effects. A careful approach needs then to be taken by antitrust
authorities in the assessment of the possible exclusionary effects of conglomerate
mergers on competitive conditions. In general, conglomerate mergers
will raise concerns when they make the leverage of market power possible,
thus having as their effect or object to foreclose the market to effective
competition. The resulting competitive harm stems from the accumulation of
substantial market power across complementary products or product ranges
which, not being based on normal business performance or competition on
the merits, may substantially reduce consumers’ choice and ultimately lead
to higher prices and a loss of welfare. Conglomerate analysis has, therefore,
to proceed with the subtle distinction between competition on the merits and
market exclusion based on anticompetitive aims. As far as the exclusionary
effects of conglomerate mergers are concerned, there is a clear parallel to be
made with vertical effects, since in economic terms the exclusion mechanism
in the context of vertical integration functions in a similar way as in the
context of a merger of complements.
Although there is no explicitly stated framework for the analysis of
conglomerate mergers either under the EC Merger Regulation or in other
Director, Merger Task Force, Directorate General for Competition European
Commission, Brussels.
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