Johan Stennek

Efficiency Gains from Mergers

The purpose of this discussion paper is to contribute to the analysis of two questions. Should a merger control system take into account efficiency gains from horizontal mergers, and balance these gains against the anti-competitive effects of mergers? If so, how should a system be designed to account for efficiency gains? The report is divided into five separate parts. The discussion paper is based on a report to the European Commission. To help answer the two questions we start with an extensive review of the relevant economic research, including both theoretical and empirical work. Next, we review the current practice in seven O.E.C.D. jurisdictions. Finally, we propose a merger control system, emphasizing the central role of informational limitations. Based on our conclusions from the empirical literature that efficiencies may need to be assessed on a case-by-case basis, we construct an information-economizing two-stage decision framework for evaluating mergers. In a first stage, notified mergers are assessed using routine tools with modest information requirements. Mergers that do not pass the first stage test are subject to further investigation, including an efficiency defence. ZUSAMMENFASSUNG - (Effizienzgewinne von Unternehmenszusammenschlussen) Das Diskussionspapier leistet einen Beitrag zur Analyse von zwei wettbewerbspolitischen Fragen: Sollen im Rahmen der Fusionskontrolle Effizienzgewinne horizontaler Zusammenschlusse berucksichtigt und den wettbewerbsbeschrankenden Wirkungen gegenubergestellt werden? Und, falls ja, wie sollten diese Effizienzgewinne im Kontrollprozess berucksichtigt werden? Grundlage fur das Diskussionspapier ist ein Gutachten, das fur die Europaische Kommission erstellt wurde. Die Untersuchung beginnt mit einer ausfuhrlichen Darstellung der relevanten okonomischen Forschung. Dabei werden sowohl theoretische als auch empirische Arbeiten berucksichtigt. Anschliesend wird die gegenwartige Praxis der Fusionskontrolle in sieben OECD-Landern erortert. Auf Basis der gewonnenen Erkenntnisse wird schlieslich ein Verfahren fur die Analyse von Unternehmenszusammenschlussen vorgeschlagen. Das vorgeschlagene Verfahren greift die empirische Erkenntnis auf, das Effizienzgewinne nicht generell aber fallweise von Bedeutung sein konnen. Es wird ein zweistufiger Entscheidungsprozess entwickelt, um einerseits die Informationskosten gering zu halten und andererseits die notwendige Prazision des Kontrollverfahrens zu sichern. In der ersten Stufe des Verfahrens prufen die Wettbewerbsbehorden angemeldete Fusionen anhand von Standardkriterien mit geringen Informationsanforderungen. Nur solche Fusionen, die diesen Test nicht bestehen, werden dann in einer zweiten Stufe einer genaueren Analyse unterzogen, bei der Effizienzgewinne berucksichtigt werden.

Exclusive Quality - Why Exclusive Distribution May Benefit the TV Viewers

Sports organizations, Hollywood studios and TV channels grant satellite and cable networks exclusive rights to televise their matches, movies and media contents. Exclusive distribution prevents viewers from watching attractive programs, and reduces the TV-distributors incentives to compete in prices. This paper demonstrates that exclusive distribution may also give providers of contents incentives to invest in higher quality and, as a result, force competitors to reduce their prices. Exclusive distribution may benefit all viewers, including those who are excluded.

Competition vs. Regulation in Mobile Telecommunications

This paper questions whether competition can replace sector-specific regulation of mobile telecommunications. We show that the monopolistic outcome may prevail independently of market concentration when access prices are determined in bilateral negotiations. A lighthanded regulatory policy can induce effective competition. Call prices are close to the marginal cost if the networks are sufficiently close substitutes. Neither demand nor cost information is required. A unique and symmetric call price equilibrium exists under symmetric access prices, provided that call demand is sufficiently inelastic. Existence encompasses the case of many networks and high network substitutability.

Merger Control and Enterprise Competitiveness - Empirical Analysis and Policy Recommendations

This book examines the background to a change in the legal framework which occurred in May 2004 with the entry into force of a new Merger Regulation that for the first time explicitly recognises the possibility of an efficiency defence. European Merger Control assesses the likely impact of this new regulation, and discusses the pros and cons of the efficiency defence, how other merger control systems deal with efficiencies, how the investigation process can be organised to accommodate the analysis of efficiency gains and the main theoretical and practical problems which arise when anti-competitive effects have to be weighed against efficiency gains.