The Control of Mergers and Joint Ventures



The operation of merger policy depends less upon the enabling legislation and its investigatory procedures than upon the presumption which is adopted concerning the general effect of mergers on the public interest. As noted in section C of Chapter 1, a balance has to be struck between expected losses of allocative efficiency resulting from the reduction of competition and expected gains in productive efficiency; and different authorities may adopt different presumptions in that respect. In an early case the European Court of Justice has ruled that an increase in the market share of a dominant undertaking can on its own constitute a breach of the Treaty of Rome (Continental Can 1973). European Union merger regulation is not now confined to dominant undertakings, but it does not seek to prevent mergers unless they impede effective competition. The regulation stipulates that account is to be taken of technical and economic progress which is to the consumers’ advantage, but only if no obstacle to competition is created. In practice, however, efficiency gains are often balanced against losses of competition. The commission is, moreover, enjoined to place its appraisal

within the general framework of the fundamental objectives referred to in Article 2 of the Treaty, including that of strengthening the Community’s economic and social cohesion (Rehearsal 13 to Regulation 4064/89 examined by the Court of First Instance in Perrier Union 1992)


Market Share Public Interest Fair Trading Joint Venturis Competition Policy 
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© Nick Gardner 1996

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