Merger Remedies, Effects and Possible Improvements

Lars Klyve Dahl

Student thesis: Master thesis

Abstract

This thesis focuses on merger remedies in European merger control. The aim of the paper is to identify some of the challenges with the current regulation. Among others is the problem with the appointment of trustees in the implementation of merger remedies. The overall challenges with the merger remedies are discussed. It is shown that the present system clearly creates problems when the companies themselves design the merger remedies. The actual purpose of the merger remedies is by definition to eliminate all competition concerns. But the actual reach of the merger remedies is not clear. It is shown that the proportionality principle regarding the merger remedies gives the Commission some degree of manoeuvring, which creates legal uncertainty. This opens for a strategic play by the parties wishing to merge. It is shown that this strategic play clarifies the actual reach of the remedies. This does however limit the remedies to just maintain the same competitive situation ex post as it was ex ante. This creates the problem of merger remedies needing to be 100 % effective to reach their objective. Further on the paper shows that the present regulation gives the merging companies little incentive to argue for efficiencies, relating to the merger. To test the actual effects of the merger remedies an event study is used. Five pharmaceutical mergers approved with merger remedies are used as a sample. The results show that the merger remedies in many cases are not effective in restoring competition ex post. The Commission also imposes merger remedies on pro-competitive mergers. To address some of the problems with merger remedies under
the present regulation, the paper comes with some recommendations. It is shown that the Commission should take greater caution in the process with the trustees. Greater flexibility regarding the remedies, a more thorough investigation of the acquiring firms, a stop to allowing complex mergers in phase 1 investigations and the Commission themselves designing the remedies would address some of the present problems with the current regulation. It is shown that the latter might not be as costly as one would think.

EducationsMSc in Commercial Law, (Graduate Programme) Final Thesis
LanguageNorwegian
Publication date2016
Number of pages85
SupervisorsJens Fej√ł