On 21 September, 2006, at the invitation of the Bundeskartellamt, the Working Group on Competition Law, a meeting of competition experts, both academics and practitioners, held their annual conference in Bonn and discussed the treatment of so-called conglomerate mergers under merger control. Among the participants were university professors from economic and legal faculties as well as judges from the cartel divisions of the Federal Court of Justice and the Düsseldorf Higher Regional Court. The European Commission was represented by its Director General for Competition, Philip Lowe. A Bundeskartellamt working paper on “Conglomerate Mergers in Merger Control” formed the basis of discussion.
Conglomerate mergers are mergers which do not lead to horizontal overlaps or vertical interlocks between the merging companies but in which the products of the companies stand in a complementary or substitutional relationship with one another. The anticompetitive effects of such mergers are not immediately apparent.
The President of the Bundeskartellamt, Ulf Böge stated: “The discussion about the treatment of conglomerate mergers is an ongoing one. It is the task of each competition authority to continually review, improve and amend its own positions on this. New findings from the field of economic science also have to be considered in this process. The annual conference of the Working Group on Competition Law provides an excellent forum for a regular exchange of ideas and information between academics, authorities and the courts on current competition law issues.”
No other area of competition law is as controversial among competition authorities and competition law experts as the treatment of conglomerate mergers under merger control. The assessment of the GEL/Honeywell merger, which was cleared by the US competition authority and prohibited by the European Commission, is an example of the different viewpoints even among the competition authorities themselves. A prominent case in Germany was the Springer/ProSiebenSat1 merger, which the Bundeskartellamt prohibited this January and which has since been an issue of intensive discussion in the general public and among competition law experts.
Nonetheless, there was wide-reaching agreement among this year’s conference participants that merger control is necessary and appropriate in the case of conglomerate mergers. The question of whether merger control here should concentrate on structural aspects, such as the elimination of potential competitors, or behavioural aspects, such as bundling strategies made possible by the merger, was the subject of controversial discussion. Another area of focus lay with the issue of efficiencies. Considerable doubt was raised as to whether conglomerate mergers actually lead to the efficiencies sometimes assumed as a matter of course and if so, whether these are then passed on to consumers if the companies have secured a dominant position.
