Abstract
We analyze evidence production in merger control as a delegation problem in an inquisitorial competition policy system. The antitrust agency’s incentives to produce evidence on the efficiency of a merger proposal depend critically on its action set. Allowing for a compromising remedy solution reduces information acquisition incentives, and could therefore reduce consumer welfare. The effort-frustrating effect of the remedy solution can be eliminated if a remedy solution can be implemented only after evidence on the efficiency of a merger proposal has been produced.
Highlights
In a landmark decision in May 2020, the General Court of the European Union annulled the decision of the European Commission to block the acquisition of Telefonica UK by Hutchison 3G UK: The Court stated that the Commission failed to prove that this acquisition would have harmed competition
The intermediate decision serves as a “safe” option that avoids the risks that are associated with extreme rulings; an extreme-option system may lead to greater evidence acquisition incentives and possibly higher consumer welfare
While this insight appears to be a simple one, it stands in contrast to the generally optimistic view on merger remedies as, for instance, expressed in the European legislation, which describes remedies as an effective way to restore competition (EC 2008, Article 22)
Summary
In a landmark decision in May 2020, the General Court of the European Union annulled the decision of the European Commission to block the acquisition of Telefonica UK by Hutchison 3G UK: The Court stated that the Commission failed to prove that this acquisition would have harmed competition. This case highlights the policy relevance of the question how antitrust agencies produce evidence, and how the incentives to produce evidence in merger control can be enhanced. In a landmark decision in May 2020, the General Court of the European Union annulled the decision of the European Commission to block the acquisition of Telefonica UK by Hutchison 3G UK: The Court stated that the Commission failed to prove that this acquisition would have harmed competition.1 This case highlights the policy relevance of the question how antitrust agencies produce evidence, and how the incentives to produce evidence in merger control can be enhanced. As the remedy solution represents a compromising choice and thereby the negative effect of a false extreme decision, allowing for it reduces the agency’s incentives to obtain information on the merger’s efficiency type. We analyze “evidence-based remedies” whereby a remedy solution can be implemented only if the agency has gathered and evaluated information that supports the ex-post optimality of the remedy decision. As a consequence, requiring evidence for the remedial solution is always weakly preferred over a no-remedy regime
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
