Day Two, Session One
Competitive Effects
Andreas Bardong
Head of Section Merger Policy,
Bundeskartellamt, Germany
Outline Day Two Session One
ICN Merger Workshop Taipei 10-11 March 2009
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Brief Overview on competitive effects analysis,
guidance from:
 ICN Recommended Practices for Merger
Analysis
 ICN Merger Guidelines Workbook
Role Play:
 Interviews of competition official with competitor
 Interview with customer
Your turn:
 Analysis of Information provided in interviews in
Break out session
Competitive Harm
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ICN Merger Workshop Taipei 10-11 March 2009
Will the merger lead to competitive harm?
Price increase
Negative effect
on quality
and variety
Competitive
Harm
Limitation
of output
Negative effect
on innovation
Counterfactual
ICN Merger Workshop Taipei 10-11 March 2009
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How does the merger change the situation on the market?
Situation pre-merger
Likely situation post-merger
Situation without
the merger
(Counterfactual)
Competitive Effects
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ICN Merger Workshop Taipei 10-11 March 2009
Mainstream theories of competitive harm?
Competitive
Effects
Unilateral
Effects
Coordinated
Effects
Types of Mergers
ICN Merger Workshop Taipei 10-11 March 2009
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Negative competitive effects can occur as a
result of different types of mergers
Typical case:
Also possible:
vertical
mergers
Horizontal Merger
Conglomerate
mergers
Competitive Effects (II)
ICN Merger Workshop Taipei 10-11 March 2009
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Unilateral Effects
Coordinated Effects

Non-coordinated action by
market participants

Coordination of behaviour
between companies in a
market (not necessarily
collusion).

In particular: Merging firms are
able to excercise market
power, e.g. raise price, limit
output or quality

Merging parties and some
competitors coordinate on
price, output, or
customer/market allocation.

Merger eliminates competition
between merging parties

Merger increases the liklihood
of coordination or strengthens
existing coordination.
Coordinated Effects
ICN Merger Workshop Taipei 10-11 March 2009
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Is coordination stable? Does merger change situation?
Ability to identify
terms of coordination
Costly to cheat
(other must be able to
detect and punish cheating)
Competitive
constraints
from outside
must be weak
(other competitors,
buyer-power, entry)
Coordinated Effects (II)
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ICN Merger Workshop Taipei 10-11 March 2009
 Relevant factors include:
Market transparency
Product homogeneity
Structural links
between companies
Maverick firms
spare capacity of nonParticipating competitors,
barriers to entrys
Multimarket contacts
Buyer power and symmetry