Considering Non-Price Effects in Merger Control: OECD Background Note

Abstract

In a competitive market, firms and consumers make decisions based on several aspects of the product involved. While price is a fundamental aspect, it is not the only one: in many markets, innovation, quality, variety or even privacy may play at least some role in the competition between firms. This paper will introduce these characteristics, and the merger theories of harm associated with them. It will also describe some of the practical challenges involved in considering non-price dimensions of competition, namely identifying when they are important, and considering price and non-price effects together. Although the theoretical basis for the non-price effects of mergers is mixed, the consideration of these effects will be unavoidable in at least some cases. Competition authorities will therefore need to conduct a case-by-case, evidence intensive analysis when considering merger effects for markets with competition on non-price dimensions. Risks of introducing subjectivity to the process can be minimized with a focus on concrete evidence and an assessment of the probabilities of impact.