Mergers: An integral part of the competition landscape to be closely monitored
Almost all systems of competition law provide for control of mergers, to prevent companies from joining together to eliminate competition between them.
A merger could be a complete union of two or more companies, a more one-sided takeover or the transfer of parts of one firm to another.
Deciding whether a merger will harm competition can require sophisticated economic analysis of markets and the effects of the transaction. Yet this sophisticated analysis must in most jurisdictions be carried out to strict deadlines so as to protect the procedural rights of all affected parties.
Why do competition authorities analyse mergers?
Most mergers are beneficial to competition, or at least do no harm to it, so competition authorities typically conduct a quick screening exercise to identify the exceptions. In, mergers between competitors can result in very large costs to consumers and to the economy more generally, so it is essential that authorities have the power and skills to investigate effectively and to remedy any potential problems they find (including by blocking the merger).
Mergers between companies that do not directly compete (such as a ‘vertical’ merger between a supplier and its customer) rarely raise competition concerns; but when they do, they require very sophisticated economic analysis to assess whether the effects are anti-competitive or efficiency-enhancing.
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