The Blurred Scope of Non-Horizontal Merger Control in Europe

Abstract

The 2008 Non-Horizontal Merger Guidelines of the European Commission did not entirely succeed in supplying a plausible theory of harm regarding those mergers that cause competitive concerns, because of what could be optimistically considered only a misleading wording. This is mainly due to the use of the term “foreclosure” and to the reference to long-term profits which, it is said, could also provide incentives for foreclosing strategies. Because of this, it is not clear whether non-horizontal merger control has to prevent price increases due to short-term profit maximizing firms (as horizontal merger control does) or whether it must contrast exclusionary conduct, of the type examined in the assessment of abuses of dominance (under Art. 102 of the Treaties). We motivate our preference for the first alternative and, consequently, advocate the removal of the term “foreclosure” from the Non-Horizontal Merger Guidelines. Although the first implementation of the Guidelines by the Commission does not show relevant flaws, there is still the risk that the literal reading of the Guidelines could lead to a wrong merger control enforcement by European Competition Authorities.We also believe that, for the purpose of clarifying the appropriate scope of the assessment of a vertical merger, a more extensive employment of simulation techniques could be effective, as they clearly focus on short-term incentives to increase prices. We exemplify how to run such an exercise under different hypotheses.