For the customer’s sake: The competitive effects of efficiencies in European merger control

Summary:

The economic rationale underlying modern merger control is that competition is a means to achieving efficient market outcomes and increased economic welfare. Consequently, distortions to the structure of a market, such as large-scale mergers that may significantly impede competition ought to be screened and if necessary prevented. However, mergers may not always be harmful for competition. When motivated by the companies’ desire to become more efficient and competitive, mergers may contribute to the very process of optimal resource reallocation and improve (or not impede) the competitive performance of affected markets.

Merger-specific efficiency gains can offset price increases or other anti-competitive effects caused by the creation or strengthening of a dominant position resulting from a merger. In addition, efficiencies, more often than not, affect post-merger competitive dynamics and under specific circumstances their effects are likely to be pro-competitive rather than anti-competitive.