Merger Control Regime Research Articles

The Foreign Subsidies Regulation of the European Union: A New Instrument Levelling the Playing Field?

The European Union (‘EU’) has adopted a Foreign Subsidies Regulation (‘FSR’) to address potential distortions of competition in EU markets caused by subsidies granted to companies by non-EU governments. The FSR aims to level the playing field for all companies active within the EU and to close a regulatory gap left by existing frameworks (such as the EU’s State aid and merger control regimes or trade defense instruments). This article provides a comprehensive overview of the FSR and the accompanying Implementing Regulation and reflects upon their practical implications for companies engaging in economic activity in EU markets. Has a simple idea (i.e., extending the controls already applicable to government support by EU Member States also to support by non-EU governments) morphed into a bureaucratic monster burdening companies with needless red tape? Will the FSR achieve its goals effectively or will it put too much strain on the European Commission’s resources? Is the FSR about fair competition or is it simply protectionist? European Union, subsidies, mergers, acquisitions, M&A, public procurement, government contracts, State aid, competition, trade defense, Foreign Subsidies Regulation, FSR

Disentangling completed transactions in the UK: experiences and challenges

The UK has a voluntary, non-suspensory merger control regime, such that mergers, acquisitions and other transactions can be, and routinely are, completed before they are investigated by the CMA. However, the CMA can, and often does, investigate mergers, acquisitions and other transactions that have not been notified to it. It has powers to prevent further integration between the merging parties’ businesses, and to require existing integration to be unwound, pending the conclusion of its investigation. Where the CMA identifies competition concerns, whether at Phase 1 or Phase 2, the fact that a merger, acquisition or other transaction has been completed can give rise to difficulties in identifying, implementing and ensuring the effectiveness of a remedy. This article discusses the CMA’s powers to impose interim measures and its approach to remedies in completed transactions. It also discusses the lessons that the CMA has learned from implementing remedies in merger investigations into completed transactions.

Evolving Character of the Indian Merger Control Regime

This article examines the evolving character of the Competition Commission of India (CCI) as regards merger review and discusses how CCI has fared in meeting legislative expectations and what is to come—best studied through analysing CCI’s substantive and procedural approaches, its stance in complex merger cases, initiatives for efficient case disposal, and the quirkier aspects of India’s merger control regime. The analysis shows that, through constant reforms, CCI has evolved into one of the most dynamic regulators amongst major merger control jurisdictions globally, displaying a willingness to adopt a business-friendly approach while dealing with complex transactions. CCI appears to be sufficiently adaptable to meet new economy challenges.

Regulating Combinations in Platform Markets: An Indian Perspective

Data has emerged as the most important economic asset in the digital economy. Firms in the digital era have been inclined to collect as much data as possible, which can then be used to make strategic business decisions to gain competitive significance over other market players. Data is the new oil in the global economy, and the big fish are eating up small ones to remain dominant in the market. The giant players are going for numerous mergers and acquisitions, with a special focus on small, emerging players in the market, and often, due to the requirement of a threshold for investigation, the combination goes unnoticed. The point of discussion is also whether we need a separate legislation to tackle these markets. This research focuses on the role of data, the big players and their merger patterns, and the enforcement gap in merger control regimes in global digital markets, where data plays a primary role. This research examines the intricacies of digital markets and the challenges they pose before competition authorities. While discussing the challenges, the authors have emphasised the parameters of jurisdictional threshold incorporated in competition regimes in varied jurisdictions. The research tries to propose a separate regime for digital market combinations.

A critical reflection on the ‘Public Interest Exemption’ in China’s merger control regime

Abstract The Anti-Monopoly Law (AML) in China allows the responsible authority for merger control to consider not only the competition interest but also other public interest reasons when it reviews a takeover or merger. Where the responsible authority considers that the benefits of a takeover or merger to the public interest outweigh the harms to competition, it may ‘exempt’ the transaction. This ‘public interest exemption’ has never been formally applied since the introduction of the law in 2008. One explanation for this can be found in the ambiguity of the law: there are no legal provisions that clarify the public interest considerations. A second explanation is that China did not establish a separate review procedure for this public interest exemption. In practice, some approval decisions made by the enforcement authority led to confusion, as it was unclear whether the transactions were ‘exempted’ for public interest reasons or for industrial policies. This article reflects on the role of the public interest exemption in China. By drawing lessons from the past and examining the public interest exemption regime in Germany, it aims to provide suggestions for future reforms, against the background of the promulgation of the Amendment to the AML in 2022.

Sustainability concerns in EU merger control: from output-maximising to polycentric innovation competition

Abstract This article examines whether sustainability concerns play and should play any role in EU merger control. While competition authorities have commenced exploring pathways to excuse prima facie anticompetitive mergers on sustainability grounds, little progress has been made in setting out whether and under which conditions mergers that adversely affect sustainability parameters can be found anticompetitive. Under the EU merger control regime, the adverse effects of mergers on sustainability are only cognizable as innovation-related issues, as recently evidenced in Dow/Dupont and Bayer/Monsanto. In these cases, the Commission pioneered a novel approach aimed at predicting the impact of a merger not only on prices but also on innovation competition. This theory of harm, although a welcome improvement to the current framework of merger analysis, fails to accommodate all competition-relevant sustainability concerns because of its exclusive focus on innovation capabilities, efforts, and output. On this basis, we argue that innovation competition should not be understood only as an output-maximizing device but also as a polycentric process under which independent decision-makers pursue various innovation paths. Such an approach gives prominence to the diversity, quality, and direction of innovation and constitutes an alternative to the predominant output-centred understanding of innovation. To operationalize this notion of innovation competition as a polycentric process we explore four pathways: adopting quality-related and sustainability-sensitive innovation metrics; using indicators of industry-wide structural effects; endorsing a structural filter; and protecting nascent competitors. Adding such an approach to the existing analytical framework would, arguably, enable the Commission to deal with all sustainability concerns related to the notion of innovation competition.

Digital Platform Ecosystems and Conglomerate Mergers: A Review of the Brazilian Experience

This article highlights some of the key challenges for the Brazilian merger control regime in dealing with mergers involving digital platform ecosystems (DPEs). After a quick introduction to DPEs, we illustrate how their market power may be strengthened through conglomerate mergers, and yet these concerns remain largely unaddressed in the current landscape for merger control in Brazil. The article is divided in four sections. First, we introduce the reader to the framework for merger control in Brazil. Second, we identify the possible theories of harm related to conglomerate merger, and elaborate on the way in which their application may be affected by the context of DPEs. Third, we conduct a review of previous mergers involving DPEs in Brazil, aiming to identify the theories of harm employed (and those that could have been explored) in each case. Fourth and finally, we summarize and results and suggest adaptation to merger control in Brazil, advancing proposals for a more consistent and predictable analysis. Digital Platforms, Digital Ecosystems, Merger Control, Conglomerate Mergers, Competition Law, Antitrust, Brazil

Interplay of Data in Digital Economy and Merger Control Regime: A Conundrum without Solutions

Interplay of Data in Digital Economy and Merger Control Regime: A Conundrum without Solutions

Mergers, Acquisitions and Merger Control in an Algorithmic Pricing World

Abstract This paper considers whether pricing algorithms present novel issues that existing merger control frameworks and practices are inadequate to address, particularly in relation to pre-merger disclosure of pricing algorithms and the suitability of current tests and remedies for addressing coordinated effects. Through a comparative and critical analysis of the merger control regimes and practices of the European Union, United Kingdom, and Australia, this paper finds that whilst such regimes and practices are broadly adequate for dealing with algorithmic transactions, there are nonetheless potential areas for improvement. Disclosure of a pricing algorithm may contravene prohibitions on the sharing of competitively sensitive information. As such, merger parties may need to rethink aspects of their usual due diligence procedures. Pricing algorithms may also increase the potential for coordinated effects to arise in some markets that would ordinarily have been considered too complex, asymmetric, opaque, or insufficiently concentrated for tacit coordination to occur, or be used to retaliate more effectively against deviations from a coordinated equilibrium, or to raise the height of barriers to entry. Competition authorities may therefore need to amend their standard approach to investigating and assessing coordinated effects, as well as their traditional approach to remedies.

Behavioural Remedies in Oligopolistic Markets under the Indian Merger Control Regime

Competition authorities primarily make use of two types of remedies, namely, “structural” and “behavioural,” or a combination of the two1, before clearing mergers that are likely to cause substantial harm to competition. Of these, structural remedies have been the predominant choice. However, of late, in the wake of the digital revolution and greater emphasis on designing remedies on a case-by-case basis, behavioural remedies have witnessed increased use. To this end, this paper seeks to address the role of behavioural solutions in the oligopolistic market structure under Indian competition law, with a focus on the merger control regime. It also intends to understand and critically analyse the literature on the problem of oligopolistic markets and the approach adopted with respect to remedies employed by the competition authorities of various jurisdictions (including the European Union (EU), the United States of America (USA), Canada, South Korea, Brazil, and India) to address the problem. Furthermore, the paper aims to examine the scope and limitations of behavioural remedies and their potential role in the conditional clearance of mergers. We use the number and nature of merger control investigations in the aforementioned jurisdictions in which behavioural remedies were adopted during 2015–19 to examine the conditions under which these remedies were used. The findings indicate that there is no straitjacket rule in the design and implementation of remedies employed while assessing the potential competition harm of mergers. The incidence of the implementation of behavioural remedies varies according to, inter alia, the nature of the concerned industry, the nature of competition harm (unilateral/coordinated, vertical/horizontal concerns), and the specific facts of the case.

Non-competition Goals and Their Impact on South African Merger Control: An Empirical Analysis

Merger control regimes in various jurisdictions—especially in Africa—feature non-competition objectives in addition to conventional goals, such as the maintenance or promotion of competition. Such ‘public interest’ objectives—including the promotion of employment, small business and particular industries—create special challenges for competition authorities. Furthermore, the broad definition of, and complexity that are associated with, non-competition objectives may increase uncertainty about merger control. We study the systematic impact of public interest concerns on South African merger decisions, in terms of the duration of adjudication and consistency over time. Our results suggest that the adjudication of mergers that feature public interest concerns take longer. More important, these cases have a higher probability of having conditions that are imposed for approval, and this has been increasing steadily over the past decade. This indicates more aggressive merger control and raises policy questions about the consistency—and hence predictability—of South African merger decisions.

Implications of the Digital Economy on Merger Control in Pakistan and China: Policy Implications for Pakistan

The rise of the digital economy has challenged the foundation of competition law frameworks the world over. Today, the antitrust doctrine finds itself confronting a new economy; an econo-my wherein data acts as a currency, markets are without prices, market collisions are based on algorithms, and the market is ‘infinite’. Several jurisdictions such as Germany, Austria, and China have developed new regulations or amended existing legislations to confront the chal-lenges presented by the digital economy. A dearth of theoretical and empirical literature has evaluated whether digital markets are so fundamentally different as to require a different set of rules. Of specific interest to this paper is whether current competition rules are sufficient to deal with mergers and acquisitions (M&As) in digital markets. This paper assesses M&A regulations in China and Pakistan in light of the new digital economy. Expert interviews were conducted using semi-structured interviews to investigate the comparisons between Pakistan’s and China’s merger control regimes. The findings indicate that China’s merger control regulations are better adopted for the digital economy than Pakistani’s. It also sets out the policy implications for competition policy makers in Pakistan.

Consolidation of the State-Owned Enterprises in China: A Missed Opportunity for the EU Merger Control?

Mergers of China’s state-owned enterprises (SOEs) aimed at increasing their competitiveness and their presence on global markets raised a number of challenging questions concerning their appraisal under merger control regimes worldwide. The review of the Commission’s merger control practice reveals numerous instances where it presumed the existence of a ‘single economic unit’ comprising several Chinese SOEs when assessing competitive effects of Chinese SOEs’ acquisitions in Europe. The assertion of merger control jurisdiction over a Chinese SOE-to-SOE merger would require the Commission to treat these SOEs as autonomous economic entities, which will have an impact on future assessments of Chinese SOEs’ acquisitions of European companies.

The Role of Public Interest Considerations in African Merger Control Regimes

The Role of Public Interest Considerations in African Merger Control Regimes

E-Hailing Services: Antitrust Implications of Uber and Grab`s Merger in Southeast Asia

Uber-Grab’s merger had attracted antitrust scrutiny by competition authorities in Southeast-Asia. The merger between the two had created a large giant company that provides various services through a platform such as ridesharing and food delivery services. According to the deal, Grab will take over Uber’s assets (ridesharing and food delivery service), and in return, Uber will take a 27.5 percent stake in Grab. Although Grab claimed that the merger would create a cost-efficient platform in Southeast Asia and put it in a better position to serve consumers, there was a genuine concern that the merger will reduce competition in the market and provide incentives to Grab to engage in anti-competitive behaviour such as increasing the price of its services. This article aims to analyse how different countries in Southeast Asia responded to the Uber-Grab’s merger and measures taken to address competitive concerns ex-ante and ex-post-merger. Unlike other competition jurisdictions in Southeast-Asia, the Malaysia Competition Act 2010 contains no merger control provision, which empowers the Malaysian competition authority to block any merger that has the effect of substantially lessening competition. The studies on how other countries evaluated the Uber-Grab merger could assist Malaysia’s competition authority to regulate the future behaviour of the big digital platform in the Malaysian market. This article was written based on research that relies on both primary and secondary sources. Primary sources include statutory provisions on competition, decision, proposed decision, interim measures, and others. while secondary sources include journal articles, news, internet resources, and others. The article also adopts a comparative approach in order to analyse the approaches and measures taken by the various merger control regimes in Southeast Asia in dealing with the Uber-Grab’s merger.

Merger Policy in Digital Markets: AnEx PostAssessment†

AbstractThis paper presents a broad retrospective evaluation of mergers and merger decisions in markets dominated by multisided digital platforms. First, we document almost 300 acquisitions carried out by three major tech companies—Amazon, Facebook, and Google—between 2008 and 2018. We cluster target companies on their area of economic activity providing suggestive evidence on the strategies behind these mergers. Second, we discuss the features of digital markets that create new challenges for competition policy. By using relevant case studies as illustrative examples, we discuss theories of harm that have been used or, alternatively, could have been formulated by authorities in these cases. Finally, we retrospectively examine two important merger cases, Facebook/Instagram and Google/Waze, providing a systematic assessment of the theories of harm considered by the UK competition authorities as well as evidence on the evolution of the market after the transactions were approved. We discuss whether the competition authority performed complete and careful analyses to foresee the competitive consequences of the investigated mergers and whether a more effective merger control regime can be achieved within the current legal framework.

EU Control of Concentrations: Update to the Reality of Global Business?

The European Union is intensively discussing changes in its merger control to adapt the existing regime, laid down by Regulation No 139/2004 (EUMR), to new realities. These are, besides the challenge posed by the development of the digital economy, issues connected with the global success of competitors from non-EU countries, which are presumed to be better placed to succeed in global competition due to more lenient policies of their home countries while EU businesses remain subject to disproportionally stricter competition supervision. In the current EU, the call for some subordination of competition decision-making to industrial policy priorities is growing in order to allow EU-based companies to grow through mergers and acquisitions and reach the size necessary for withstanding competitive pressure from non-EU corporate giants. The text maps and evaluates current proposals for changes to the EU merger control regime, advocating maintaining a strong competition policy unsubordinated to industrial policy, however a competition policy which would be more sensitive to its wider context.

Mapping the Inter-relation of Abuse of Dominant Position and Merger Control Regime vis-à-vis Big Data: The Curious Case of WhatsApp Privacy Policy

The meteoric rise of the digital platforms and their increasing dominance can be easily considered the highlight of the latter half of the previous decade. Even though antitrust laws do apply to such online markets, the determination of the competitive strength of in these digital markets was often determined by the quantum of data accumulated by the entities. The article is an attempt by the authors to evaluate the feasibility of applicability of the existing competition law framework to the growing platform economies and the resultant implications of personal data being collected by such entities. For this research, the authors have outlined three specific questions. First, what is the inter-relation between the growing platform economy and merger control regime of a country? Second, what are the possible avenues of concerns that may arise due to collection of personal data? Finally, what are the possible enforcement challenges that would hamper the applicability of existing competition regimes to the digital platforms? The research is doctrinal research, and the authors have adopted a comparative-analytical research methodology for evaluating the above-mentioned research questions. The authors have considered the jurisdictions of the EU and India as the geographical scope for the research. The authors consider the following upon the conclusion of the study. First, the use and access of this data after the merger with companies with low turnover confer the acquiring enterprise a market power by which it can have an edge over its competitors in the market which will ultimately harm the competition in the market. Second, the digital market is data-driven; hence, collection of copious amounts of data places the big-tech players in a position of control, allowing them to indulge in exclusionary and exploitative conduct. Third, the assessment basis of combinations, more specifically in cases of data-based entities within the competition law, needs a serious re-assessment to include data within the scope of assessment as it is the primary asset in such cases.

The CMA steps up enforcement of procedural merger control rules: key lessons from recent cases

The powers of the CMA to obtain information about a merger and to prevent (or even unwind) integration of merging businesses pending the conclusion of an investigation into the competitive effects of the merger are an extremely important part of the UK's voluntary merger control regime, which has no mandatory notification or standstill obligations. The CMA has adopted a series of decisions over the last two years which indicate that it is taking an increasingly robust approach to compliance with notices and orders issued in this context. This is line with both the global trend towards tougher enforcement of procedural merger control rules, and the CMA's increasingly strict approach to enforcement of procedural rules in other contexts, such as antitrust investigations and market studies. This article explores this trend and highlights some key lessons from recent cases for merging parties and their advisers, focussing in particular on fines imposed for breach of interim measures and non-compliance with formal information requests. It also identifies some possible reasons for the toughening of the CMA's stance including, in particular, the interplay with the anticipated impact of Brexit.

Public Interest in Merger Control: The Lay of the Land

In recent years, regulators and politicians have raised questions about whether merger control is “fit for purpose” in the modern economy, and in particular about whether the consumer welfare standard remains the appropriate lens through which to assess transactions, or whether merger control should consider the potential impact of a transaction on broader public interest (PI) objectives, such as employment, the environment, data privacy, national security, or industrial or trade policy. Many merger control regimes globally already include a public interest component, and in thinking about whether it would be reasonable or appropriate to add or strengthen the PI component of a merger control regime, it may be helpful to look at regimes that already include a PI component to consider the ways in which this may be structured and whether these standards are likely to be successful in achieving PI aims. This piece surveys the existing merger control regimes with a PI component to identify lessons that may be useful for jurisdictions considering whether and how to expand a merger control regime to include PI.