Competition shake-up would curb the merger “ayatollahs”

Date: 27/03/03

By Peter Chapman

MARIO Monti's plans to close down the merger task force (MTF) will deflate the Commission's biggest egos, a top lawyer claimed this week.

Under the plan, Monti intends to farm out merger control experts to specialist units in his competition department (DG Comp) currently dealing with issues such as cartels, state aid and restrictive agreements in specific sectors from aerospace to supermarkets.

The move is aimed at improving staff management during the current slowdown in merger and acquisition activities and also to weave expertise throughout DG Comp.

Wolfgang Deselaers, a senior partner at international law firm Linklaters, said the move should improve the way all competition cases are handled.

But he said breaking up the MTF would also make it easier to deal with officials that regard themselves as part of an elite band of top Commission brains. He claimed this mindset had been a factor in the recent losses suffered by the Commission at the hands of the European Court of First Instance.

"That is part of the problem. They consider themselves "ayatollahs" - the elite and this led to the court defeats to some extent. It was very difficult to argue with them because they would say "we know it better any way" and some times they really did not."

Deselaers, who heads Linklaters' German practice in Brussels, added that the move could lead to a short-term exodus of MTF competition lawyers - although some may find it difficult to land new jobs because of a hiring freeze in many firms.

But other experts claimed the move could actually harm the quality of merger reviews.

Peter Bamford, director of mergers and competition economics with PwC Economics - part of accounting giant PricewaterhouseCoopers - warned the move was too radical.

"You can correct the levels of academic rigour and impressions of arrogance, but you don't have to restructure the MTF to do that.

"I think they should think carefully about it. It goes against the tried and trusted method of organisation in most competition authorities. There are benefits in dealing with mergers in a separate branch that looks at that issue alone, because of the short time scales and the need to have people up to speed.

"Spreading it to separate branches could mean they only come across a merger infrequently and it becomes more difficult for them to deal with."

Meanwhile, Bamford, former chief economist at the UK's Office of Fair Trading, added that the Commission ought to hire more economists in the DG, besides the new chief economist it is currently recruiting.

"There is clearly merit in bringing a top chief economist, but this should not be instead of developing the economic expertise more generally throughout DG Comp."

Mario Monti plans to close down the Merger Task Force and transfer merger control experts to specialist units in his competition department.