Disentangling Consummated Mergers – Experiences and Challenges

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One of the areas of divergence in merger control regimes around the world is the ability of competition authorities to review and remedy the anti-competitive effects of consummated mergers. Only few jurisdictions, beyond those with a voluntary notification system, which allows parties to close a transaction without prior clearance from the competition authority, have the power to review consummated mergers and to impose remedies if such mergers would result in a significant lessening of competition.

This background note reviews the policy considerations arising in relation to designing effective remedies for consummated mergers with an anti-competitive effect. It focuses primarily on the remedial actions available to competition authorities when they have the power to review mergers ex post regardless of whether they have already reviewed and approved them ex ante, or fell below notification thresholds (i.e. they were not notified), and that later resulted in anti-competitive effects once consummated.

It concludes that although the powers to review consummated mergers remain limited, more jurisdictions are considering adopting them. While such powers allow to fill the enforcement gap and allow the review of non-notifiable consummated mergers, important considerations should guide the authorities’ use of such powers. These include the effects that ex post merger investigations may have on the incentives to merge, especially if they are applicable also to notified mergers; the availability of proportionate and effective remedies, given the status of integration of the parties’ assets; the costs of disentangling the consummated merger and its benefits.

The background note discusses in depth the feasibility of imposing structural remedies in an ex post context, drawing from experiences in other areas including self-initiated private break-ups, break-ups and structural remedies in non-merger cases, and experiences with break-ups and structural separation in regulated industries. It concludes that divestitures remain the preferable remedial option also in an ex post context, but that competition authorities should also consider adopting behavioural / conduct remedies, whose limitations appear to be less significant when designed in an ex post context.