Browsing by Subject "Relevant Product Market"

This thesis was inspired by the debate that followed the Siemens/Alstom merger prohibition concerning European Champions. The thesis will in particular examine the process of market definition in merger control proceedings, and how the Commission’s margin of discretion in market definition analysis affects legal certainty. The purpose of merger control is to assess the effects of mergers before they are carried out and to prevent mergers that may have adverse effects on competition. In order for markets to work properly and to ensure effective competition, significant market power needs to be supervised and any harmful exercise of such needs to be prohibited. In order to assess an undertakings market power on a given market, the relevant markets need to be defined. This thesis will only focus on the definition of the relevant product market. The main purpose for market definition is to identify in a systematic way the competitive constraints that the undertakings involved face. Effective competition requires that the undertakings active on a particular market are subject to a sound degree of competitive constraints, demand substitutability, supply substitutability and potential competition. Definition of the relevant market is conducted primarily by considering demand substitutability. Demand substitutability is commonly measured by using the SSNIP test but ideally the assessment combines many types of evidence and makes use of all available data. However, the SSNIP test is not applicable in all situations, increasingly so due to digitalisation. There are several instances where the traditional approach to market definition is not possible due to the structure of the market, such as in the case of aftermarkets, innovation markets, and multisided markets. In these instances, the market definition process needs to be altered to fit the market structure in question. However, considerable uncertainties regarding market definition on these markets still exist. Due to the fact that merger assessment is conducted ex ante, it inherently involves some degree of speculation. In addition, definition of the relevant market is conducted on a case-by-case basis, which means that undertakings cannot rely on previous practice in order to foresee the likely effects of their actions, which augments the problems concerning predictability in the market definition process. The Notice on Market Definition does little to improve predictability, especially with regard to the increasing amount of unclear questions relating to market definition in the digital era. The Commission has been granted a margin of discretion in the assessment of complex economic and technical issues. In practice, this means that the Commission has a wide discretion concerning the definition of the relevant market. This further affects the predictability of merger control in the EU. As market definition can determine the direction of the whole case, it allows the Commission to implement its own competition policy. Given that there is no division of powers when it comes to merger control and that the Commission is subject to ‘light judicial review’ by the EU Courts, the Commission has the possibility to steer merger control in the EU according to its will, and impose a strict competition policy on European undertakings. Therefore, it can be concluded that the Commission’s margin of discretion is too wide. The problems concerning predictability affect the legal certainty in merger control. Without legal certainty and predictability market players in the EU become less willing to initiate merger proceedings. The lack of predictability creates a deterrence effect and hinders economic growth in the EU.