Mergers & Acquisitions Guest Lecture

Question 1

How do you assess the economic harm?

Answer 1

1. How big is the sector
2. how big is the turnover

Question 2

What are the 3 competition law pillars?

Answer 2

1. M&A
2. Cartels
3. Abuse of market dominance

Question 3

Elaborate on the M&A pillar. What is the procedure of M&A approval?

Answer 3

Prohibition of mergers (incl. JVs) that significantly lessen competition. Dominance created or strengthened by merger can be forbidden. Merger control is there to protect the market structure.
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When the companies who want to merge have a turnover above a certain threshold, they have to be made public to the ACM. If 2 non-Dutch companies want to merge and both or one have revenue in the Netherlands, then the ACM has to approve the merger. So it is also possible that the ACM has to approve mergers with companies that are located outside the Netherlands. Here, the turnover is important, and there’s a certain threshold for this.
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Procedure of M&A approval:
- Phase 1: lasts 4 weeks, and typically 95% of the mergers are approved in this period.
- Phase 2: lasts 13 weeks, and usually happens when the ACM discovers some clues. So when they need more time.

Question 4

Elaborate on the Cartels pillar

Answer 4

Prohibition of collusion (agreeing about prices with competitors). Collusion may also happen when companies do not physically/actively talk to each other. But if you possess information that you should not have in the first place, and use it in your advantage, that can also be considered as collusion.

Question 5

Elaborate on the Abuse of market dominance pillar

Answer 5

Prohibition of abuse of dominant position. You are able to set prices higher than the normal level if you have a dominant position. But also reduce the quality of products. That’s what makes it harmful. But keep in mind: dominance is not a problem as such, as it is part of the competitive process. But abusing the dominant market share is wrong!

Question 6

What is a Theory of Harm?

Answer 6

Theory of Harm: establish a link between the concrete behavior of undertakings and consumer harm. Next, test this link if it is true.

Question 7

What does the competitive assessment look like?

Answer 7

First, define a Theory of Harm
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Second, test the Theory of Harm.
A) Determine what the effect of the merger might be
- market shares at the starting points
- closeness of competition
B) Determine if there are countervailing effects
- buying power
- efficiencies

Question 8

What are the tools the ACM can use to step in when something’s going wrong?

Answer 8

1. Periodic penalties
2. Fines
3. Education
4. Commitments > company has to propose a solution themselves