European Competition Law provides a wide-ranging review of the European rules relating to competition: restrictive agreements, abuse of a dominant position, impact of intellectual property rights, procedure, merger control, State aid.

European Competition Law

The system of merger control includes an a priori favoring of mergers  and in this regard appears very different from the system applicable for restrictive agreements. While restrictive agreements - unlawful on principle - can be exempted, concentrations - lawful on principle - can be found incompatible . Authorization of a merger is not the consequence of an exemption but relies upon a dynamic balance and the parties can modify its result in the course of the control. The practice perfectly reflects the difference between the systems of control: of the 5,876 concentrations notified between 1990 and June 2015, only 24 - i.e. less than 0.5% of the total of transactions - were eventually prohibited . For concentrations, the concept of control has not been conceived to be carried out by a passive and penalty-inflicting administrative authority but by an active, initiative-taking authority. Furthermore, such control has been widely transferred to the parties themselves; they are almost always capable of “saving” their transaction by modifying it as a result of their commitments and the corrective measures they determine.

On the reasons of this preferential treatment, see No 18.02.

The automatic prohibition regarding restrictive agreements, which may seem very severe in certain cases, has been offset by the development of a rule of reason.

http://ec.europa.eu/competition/mergers/statistics.pdf

System of control

Article 2(3) of the regulation lays down a clear prohibition of concentrations which restrict competition: “A concentration which would significantly impede effective competition, in the internal market or in a substantial part of it, in particular as a result of the creation or strengthening of a dominant position, shall be declared incompatible with the [internal market]”. There are no other provisions in the regulation granting the Commission any power of exemption : where the control thresholds are exceeded and where it is found that competition is significantly impeded, the concentration is incompatible.

This is put into perspective by Article 2(1) of the regulation which sets out the various factors to be taken into consideration when appraising a concentration. Along with purely competitive factors aimed at appraising the market power of the undertakings concerned - market position, economic and financial power, alternatives available to users, access to supplies or markets, existence of legal or other barriers to entry, supply and demand trends for the relevant products and services, interests of the intermediate and ultimate consumers - the regulation also refers to, “the development of technical and economic progress” provided that this development is to consumers' advantage and does not form an obstacle to competition.

The Commission did not immediately seize the opportunity offered by the regulation to substitute a truly economic appraisal for the purely competitive assessment laid down in Article 2(3). Initially, the additional efficiency that a concentration was likely to bring about either represented an unfavorable factor in the appraisal (since it was likely to strengthen a situation of dominance) , or was mentioned only as an indication . This position has been modified with the adoption of the Guidelines on the assessment of horizontal mergers, which now provide, “[the Commission] may decide that, as a consequence of the efficiencies that the merger brings about, there are no grounds for declaring the merger incompatible with the [internal market] pursuant to Article 2(3) of the Merger Regulation” .

The balance established by the Commission is not static as the parties may modify their transaction in the course of the control. A negative competitive analysis may now be offset both by the efficiencies attached to the transaction and by the corrective measures proposed by the parties.

This was not the case in the initial project that expressly provided that there would be incompatibility for concentrations indispensable to the achievement of an objective considered as a priority in the EU general interest.

Commission Decision M.469 of 9 November 1994, MSG Media Service, LawLex200500005341JBJ; M.1313 of 9 March 1999, Danish Crown/Vestjyske Slagterier, LawLex200400002628JBJ, at pt 198.

Commission Decision M.053 of 2 October 1991, Aerospatiale- Alenia/de Havilland, LawLex200400002474JBJ, OJ L 134, 5.12.1991.

Commission Notice No 2004/C 31/03, at pt 77.

European Competition Law

321. System of control

322. From competitive to economic assessment