Introduction

The Commission has launched, on 13 February 2007, a public consultation on draft Commission Guidelines on the assessment of non-horizontal mergers under Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings (the “Merger Regulation” and “the Guidelines” respectively).

Interested parties are invited to provide comments on this draft by 12 May 2007. These comments will be published on DG COMP’s web-site. Consequently, the comments submitted here below, do not contain any confidential information.

The publication of guidelines are most welcome, in so far as they clarify policy and allow companies and their advisors to assess ex-ante any potential competition issues their M&A activity may involve. In my view, the Guidelines correctly focus on the analysis of companies’ strategies and incentives to adopt one course of action or the other. The comments below will, however, focus on the points that are considered weaker or unclear, just because the purpose of submitting comments is obviously to identify areas where the Guidelines may be further clarified or improved. Therefore, the fact that most comments may be of a “negative” nature should not be taken to mean that the Guidelines are perceived as a negative document overall.

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The proposition that a competition authority would get involved in a discussion of whether a price is “excessive” appears initially as a lost case. Actual cases on predatory prices are also infrequent/rare [1], because there is a feeling that it is particularly difficult for a competition authority to determine the right level of a price and the actual cost of a good or service.

With regard to excessive prices, difficulties are compounded by the perceived pre-requisite of defining an “adequate” rate of return on investment or an “adequate” cost mark-up or profit margin. (more…)

The Commission and the Spanish competition authorities have examined two similar mergers in the pay-tv markets in Spain and Italy respectively.

Both decisions deal with similar material situations and the assessment of the impact of the respective merger on competition is largely based on common grounds.

However, the decisions adopted by each authority are widely divergent as to the type of conditions needed to address the competition concerns. The conditions imposed to authorize the mergers create a very different environment for cable operators to compete in the Italian and Spanish markets for pay-tv and, more importantly, in the telecommunications services market. (more…)

On 11th April, the Spanish Tribunal for the Defence of Competition (TDC) has rejected the authorization asked by Spanish banks for the collective fixing of interchange fees (IF) the issuing bank charges to the merchant bank for processing a credit card transaction.

The decision is unique in the EU, since VISA International obtained clearance from the Commission for cross border transactions with credit cards, and banks have obtained clearance for domestic IF charges in a number of national jurisdictions. (more…)

With the adoption of a number of decisions in the postal and telecommunications services, the Commission has brought back to live an almost forgotten area of article 82: that of predatory pricing.

Since the decisions in AKZO (1985) and Tetrapak II (1991), the Commission had not made a case on predatory pricing as such. In the last two to three years, however, the Commission has sanctioned Deustche Telekom, Deustche Post and Wanadoo (subsidiary of France Telecom) for selling below costs; the Commission is currently investigating further cases of predatory pricing. (more…)

The ongoing process of modernization of the EU Competition policy has already had significant effects in most areas from both a procedural and substantive point of view.

The importance of economic analysis that the Commission necessarily had to develop to handle mergers has now permeated entirely the other areas of competition policy, and most notably vertical restraints.

Entirely? Well, not entirely! One small group of indomitable lawyers still holds out against economic analysis from the muddy trenches of Article 82. (more…)

Price differences for homogeneous products are often a source of concern for competition authorities. Typically, competition authorities will rely on price differences to define narrow markets. Large differences on the prices charged by a company with a significant market share will also be considered as indicative of discriminatory or exclusionary conduct (fidelity rebates).

With regard to merger filings, price differences and international price comparisons feature prominently in Form CO. The kind of information Form CO requires with respect to prices can in some cases be rather misleading. (more…)