Of Brands and Barriers: Branding in Competition Law Merger Analysis

Abstract

Brands have long been recognised as a form of property that is worth protecting both at common law and in trademark legislation. The economic effect of brands is said to help consumers identify quality goods when there would otherwise be information problems in markets. It is apparent too that brands can have enormous value to companies that own them. Yet the use of brands has articulate detractors some of whom have spawned veritable political movements. Some degree of suspicion about brands also seems to be reflected in the practice of competition regulators. The questions that this paper seeks an answer to are, firstly, what role might brands play in a competition agency’s or a court’s approach to a merger under competition law? The second, and naturally arising, question asks: is this approach right? The concern is whether competition law enforcers adequately appreciate the nature of the underlying policy and economic tensions between the form and effect of intellectual property inhering in brands and the policy behind competition law. Failure to do so may have harmful consequences for markets. Recourse will be had to the literature in both economics and law in an endeavour to cast light on these and on intermediate questions of brands’ purported market power, how brands compete in markets, and the interaction between competition law and trademark law. It is outside the scope of the paper to consider how brands would affect the analysis of cases involving the misuse of market power. However to the degree that the analysis is similar to that for mergers, this paper may also cast some light on such analyses.