Examine Critically Conglomerate Mergers and How Do They Impede Competition in the Marketplace. The 'Blame Game' and What Should Proceed.

Abstract

This thesis attempts to demonstrate that conglomerate mergers should not be considered legal per se in Europe, as they are in the States, because under certain circumstances they may harm consumers. This could be achieved via numerous strategies such as tying, bundling, portfolio power, full-line forcing, predatory pricing, co-ordinated effects and so on. The traditional economic presumption endorses the view that most conglomerate mergers are pro-competitive due to their efficiencies such as quality assurance, economies of scale, promotion in research and development and lower transaction costs. However, there are some instances in which the traditional economic view may not apply such as when the Cournot effect does not operate, efficiency savings are available, and selling a bundle of products may result in reduced competition. Hence the Notice on Non-Horizontal Mergers is aligned with the traditional economic view as seen recently in the case of Kraft/Cadbury but also with its exceptions as seen through the Guidelines where foreclosure is scrutinized in detail due to the blows that the Commission faced in Tetra/Sidel, and GE/Honeywell. Certainly the Commission’s policy can be improved as it is seen from the market share and HHI levels, the inadequate discussion on control of information, and the fact that efficiencies should be paid more serious consideration, so some proposals are offered to the Commission in order to distinguish the few exclusionary cases that may occur. Also some suggestions are offered to the EU Courts which have to take the “staff” and generate more legal certainty with regards to the standard of proof, Article 102 of the Treaty on the Functioning of the European Union, and the SIEC test.