Theories of Harm: Conglomerate Effects and Types of Evidence

Tyagi, Kalpana

doi:10.1007/978-3-662-58784-3_6

Kalpana Tyagi³

Part of the book series: Munich Studies on Innovation and Competition ((MSIC,volume 10))

647 Accesses

Abstract

This chapter first discusses the conglomerate effects in ICT mergers, followed by a discussion on the significance of qualitative and quantitative evidence to identify the most suitable theory of harm.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution

Chapter: USD 29.95; Price excludes VAT (USA)

eBook: USD 79.99; Price excludes VAT (USA)

Softcover Book: USD 99.99; Price excludes VAT (USA)

Hardcover Book: USD 139.99; Price excludes VAT (USA)

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Notes

1.
William J Kolasky, ‘Conglomerate Mergers and Range Effects: It’s a Long Way from Chicago to Brussels’ (2002) 10 George Mason Law Review 533.
2.
D Daniel Sokol and William Blumenthal, ‘Merger Control: key international norms and differences’ in Ariel Ezrachi (ed), Research Handbook on International Competition Law (Edward Elgar 2012) 331.
3.
See Drauz Götz, ‘Unbundling GE/Honeywell: The Assessment of Conglomerate Mergers Under EC Competition Law’ (2001) 25(4) Fordham International Law Journal 885; Donna E Patterson and Carl Shapiro, ‘Transatlantic Divergence in GE/Honeywell: Causes and Lessons’ (Fall 2001) Antitrust 18.
4.
US DOJ, ‘GE-Honeywell: The U.S. Decision’ (29 November 2001) <https://www.justice.gov/atr/speech/ge-honeywell-us-decision > accessed 06 January 2019.
5.
Jeremy Grant and Damien Neven, ‘The Attempted Merger between GE & Honeywell: A Case Study of Transatlantic Conflict’, (2005) European Commission Website 4 <http://ec.europa.eu/dgs/competition/economist/honeywell.pdf> accessed 06 January 2019.
6.
Drauz Götz, Conglomerate and Vertical Mergers in light of the Tetra Laval Judgment, (2005) Competition Policy Newsletter 37–39.
7.
Jeremy Grant and Damien Neven, ‘The Attempted Merger between GE & Honeywell: A Case Study of Transatlantic Conflict (2005) European Commission Website 5 <http://ec.europa.eu/dgs/competition/economist/honeywell.pdf> accessed 06 January 2019.
8.
Ibid., pp. 5–6.
9.
Ibid., pp. 11–13, 24.
10.
Guidelines on the assessment of non-horizontal mergers under the Council Regulation on the control of concentrations between undertakings [2008] OJ C265/06, paras 92–93.
11.
Intel/McAfee (Case COMP/M.5984) [2011] OJ C98/1, at para 121.
12.
Guidelines on the assessment of non-horizontal mergers under the Council Regulation on the control of concentrations between undertakings [2008] OJ C265/06, para 96.
13.
Ibid., at paras 23, 95 and 99.
14.
Ibid., at para 94.
15.
Cisco/Tandberg (Case COMP/M.5669) [2010] OJ C036/09, para 1–3.
16.
Ibid., at para 4.
17.
Ibid., at para 125.
18.
Ibid., at para 138.
19.
Ibid.
20.
Ibid., at para 141.
21.
Ibid., at paras 138–39.
22.
Ibid., at para 139.
23.
Ibid., at paras 139–40.
24.
Ibid., at para 144.
25.
Ibid., at para 145.
26.
Microsoft/Skype (Case COMP/M.6281) [2011] OJ C341/02, paras 1–5.
27.
Ibid., at paras 133.
28.
Ibid., at paras 142.
29.
Ibid., at paras 143.
30.
Ibid., at paras 144–45.
31.
Ibid., at paras 146.
32.
Ibid., at paras 148.
33.
Ibid., at paras 149.
34.
Ibid., at paras 151–55.
35.
Ibid., at paras 156–57.
36.
Ibid., at para 158.
37.
Ibid., at paras 159–169.
38.
Ibid., at para 170.
39.
Ibid., at paras 203–22.
40.
United States, ‘Discussion on International Co-operation operation’ (June 2012) Working Paper No. 3 on Co-operation and Enforcement, DAF/COMP/WP3/WD (2012) 24 <https://www.ftc.gov/sites/default/files/attachments/us-submissions-oecd-and-other-international-competition-fora/062012International_coop_U%20S.pdf> accessed 06 January 2019.
41.
Intel/McAfee (Case COMP/M.5984) [2011] OJ C98/01.
42.
Intel/McAfee (Case COMP/M.5984) [2011] OJ C98/01, para 2.
43.
Ibid., at para 3.
44.
Ibid., at para 6.
45.
Ibid., at para 20.
46.
Ibid., at para 18.
47.
Ibid., at para 19.
48.
Ibid., at paras 21–22.
49.
Ibid., at para 124.
50.
Ibid., at para 128.
51.
Ibid., at paras 139–148.
52.
Ibid.
53.
Intel Corporation v The Federal Trade Commission, Docket n°9341, File n°061 0247(2009).
54.
Intel/McAfee (Case COMP/M.5984) [2011] OJ C98/01, at paras 149–62.
55.
Ibid., at paras 169–74.
56.
Ibid., at paras 175–76.
57.
Ibid., at paras 198. See for instance, Intel’s then CEO Paul Otellini noted that bringing together the assets of McAfee and Intel would ensure that security if hardware enabled and that this differentiation would offer the most effective form of security and a value differentiator from the Intel-based platforms. See Intel/McAfee (Case COMP/M.5984) [2011] OJ C98/01, at para 197.
58.
For instance Intel had earlier combined its CPU with wireless technologies that were earlier implemented in separate semiconductor products. Intel/McAfee (Case COMP/M.5984) [2011] OJ C98/01, paras 203–204.
59.
Intel/McAfee (Case COMP/M.5984) [2011] OJ C98/01, para 205.
60.
Ibid., at paras 206–11.
61.
Ibid., at paras 219–21.
62.
Ibid., at paras 222–23. Pure bundling implied that Intel’s CPUs and McAfee’s endpoint security solutions were sold ‘exclusively together’. Mixed bundling meant that either of the two products was offered at a discount when customers purchased the two together from the merged entity.
63.
Ibid., at paras 237–38.
64.
Critical loss (CL_xy) may be defined as the lost profit from reduced sales of product x that would be exactly offset by the increase in profits from increased sales of product.
65.
Both the notifying parties and the Commission undertook a Critical Loss Analysis. The Commission’s CLA found the critical loss from lost sales to OEM’s to be higher than the one submitted by the notifying parties. The differences can be attributed from the difference in the assumptions made. Although both analyses indicated that the loss would have a disciplining effect on incentives to engage in commercial bundling. See, Intel/McAfee (Case COMP/M.5984) [2011] OJ C98/01, paras 239–76.
66.
Ibid., at para 276.
67.
Ibid., at paras 289–90.
68.
See supra Sect. 6.2.3.1.
69.
See supra Sect. 6.2.3.2.
70.
Intel/McAfee (Case COMP/M.5984) [2011] OJ C98/01, para 291.
71.
Note that commercial bundling strategy (see Sect. 6.2.3.3) was in isolation not expected to cause significant impediment to effective competition.
72.
Intel/McAfee (Case COMP/M.5984) [2011] OJ C98/01, para 293.
73.
Ibid., at paras 294–96.
74.
Telefónica Deutschland/E-Plus (Case M.7018) [2015] OJ C086/7, para 532.
75.
Commission, ‘Roundtable on Managing Complex Merger Cases: How Agencies Deal with Complex Data Analysis, Surveys and Market Studies, and Obtain the Necessary Expertise for Complex Substantive Issues’ (2007) Working Paper No. 3 on Co-operation and Enforcement DAF/COMP/WP3/WD(2007)90, para 1 <http://ec.europa.eu/competition/international/multilateral/2007_oct_mergers.pdf> accessed 06 January 2019.
76.
T-Mobile/Orange (Case COMP/ M.5650) [2010] OJ C108/4, paras 55–58.
77.
Ibid., at paras 59–63.
78.
Raphaël De Coninck, ‘Economic Analysis in Vertical Mergers, Opinions and Comments’ (2008) 3 Competition Policy International, 50–51 <http://ec.europa.eu/competition/publications/cpn/2008_3_48.pdf> accessed 06 January 2019.
79.
Ibid., p. 51.
80.
Intel/McAfee (Case COMP/M.5984) [2011] OJ C98/1, paras 239–76.
81.
Oliver Budzinski & Isabel Ruhmer, ‘Merger Simulation in Competition Policy: A Survey’ (2010) 6 Journal of Competition Law and Economics 277.
82.
Gregory J Werden, ‘Why (Ever) Define Markets? An Answer to Prof Kaplow’ [13 February 2012] <http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2004655> accessed 06 January 2019.
83.
Roy J Epstein & Daniel L Rubinfeld, ‘Merger Simulation: A Simplified Approach with New Applications’ (2002) 69 Antitrust Law Journal 883, 885–87.
84.
Gregory J Werden, Luke M. Froeb & David T. Scheffman, ‘A Daubert Discipline for Merger Simulation’ (Summer 2004) Antitrust 89.
85.
Cisco/Tandberg (Case COMP/M 5669) [2010] OJ C036/09, paras 49–50.
86.
Ibid., at para 51.
87.
Ibid., at paras 48, 51. Please note that whereas the market studies indicated that the parties were one another’s closest competitors (para 48), the econometric analysis indicated that the parties were close competitors in the dedicated room solutions market (para 51). Overall, the Commission seems to have accepted the position that under the economic theory, unilateral effects may result when the parties are close competitors (meaning they need not be the closest competitors).
88.
Gregory J Werden, ‘Why (Ever) Define Markets? An Answer to Prof Kaplow’ [13 February 2012] <http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2004655> accessed 06 January 2019.
89.
Commission, ‘Roundtable on Managing Complex Merger Cases: How Agencies Deal with Complex Data Analysis, Surveys and Market Studies, and Obtain the Necessary Expertise for Complex Substantive Issues’ (2007) Working Paper No. 3 on Co-operation and Enforcement DAF/COMP/WP3/WD(2007)90, para 21 <http://ec.europa.eu/competition/international/multilateral/2007_oct_mergers.pdf> accessed 06 January 2019.
90.
Ibid., at paras 19–21.
91.
Ibid.
92.
Liberty Global/Corelio/ W&W/ De Vijver Media, Case M. 7194, at para 379, 517.
93.
Kalpana Tyagi, ‘Four-to-Three Telecoms Mergers: Substantial Issues in EU Merger Control in the Mobile Telecommunications Sector’, International Review of Intellectual Property and Competition Law 49(2) (2018), pp 185–220, available at <10.1007/s40319-018-0677-3> accessed 06 January 2019.
94.
Competition & Markets Authority, BT Group plc and EE Limited: A report on the anticipated acquisition by BT Group plc of EE Limited (15 January 2016).
95.
Ibid., at paragraph 258 stating that ‘quantitative evidence is not higher than qualitative evidence’.
96.
Commission, ‘Roundtable on Managing Complex Merger Cases: How Agencies Deal with Complex Data Analysis, Surveys and Market Studies, and Obtain the Necessary Expertise for Complex Substantive Issues’ (2007) Working Paper No. 3 on Co-operation and Enforcement DAF/COMP/WP3/WD(2007)90, para 31 <http://ec.europa.eu/competition/international/multilateral/2007_oct_mergers.pdf> accessed 06 January 2019.
97.
Marginal customers must be distinguished from the infra-marginal customers. The marginal customer will quickly respond to an SSNIP, determined based on the elasticity of demand and availability of substitutes. Infra-marginal consumers are the core consumers of a product and have strong preferences for the given product. Choice of infra-marginal customers can lead to narrowly defined markets. See Robert Pitofsky, ‘New Definitions of the Relevant Market and the Assault on Antitrust’ (1990) 90 Columbia Law Review 1805, 1806.
98.
United States v. SunGard Data Sys Inc., 172 F. Supp.2d 182-83 (D.D.C. 2001).
99.
United States v. Oracle Corp., 331 F. Supp. 2d 1131 (N.D. Cal. 2004).
100.
Ibid., at 1098.
101.
Ken Heyer, ‘Predicting the Competitive Effects of Mergers by Listening to Customers’ (2007) 74 Antitrust Law Journal 87.
102.
David Scheffman, Malcolm Coate and Louis Silvia, ‘Twenty Years of Merger Guidelines Enforcement at the FTC: An Economic Perspective’ (2003) 71 Antitrust Law Journal 277, 304.
103.
Commission, ‘Roundtable on Managing Complex Merger Cases: How Agencies Deal with Complex Data Analysis, Surveys and Market Studies, and Obtain the Necessary Expertise for Complex Substantive Issues’ (2007) Working Paper No. 3 on Co-operation and Enforcement DAF/COMP/WP3/WD(2007)90, para 33 <http://ec.europa.eu/competition/international/multilateral/2007_oct_mergers.pdf> accessed 06 January 2019.
104.
Telefónica Deutschland/E-Plus (Case M.7018) [2015] OJ C086/7, para 124.
105.
While assessing the internal documents, the Commission takes note of the specific circumstances prevalent during their preparation and use, as also the general market situation prevalent during their assessment. See for instance, Telefónica Deutschland/E-Plus (Case M.7018) [2015] OJ C086/7, para 125.
106.
Ibid., at para 320.
107.
Commission, ‘Roundtable on Managing Complex Merger Cases: How Agencies Deal with Complex Data Analysis, Surveys and Market Studies, and Obtain the Necessary Expertise for Complex Substantive Issues’ (2007) Working Paper No. 3 on Co-operation and Enforcement DAF/COMP/WP3/WD(2007)90, para 20 <http://ec.europa.eu/competition/international/multilateral/2007_oct_mergers.pdf> accessed 06 January 2019.

Author information

Authors and Affiliations

Center for Legal Informatics in the Department of Law, Aarhus Universitet School of Business and Social Sciences, Aarhus, Denmark
Kalpana Tyagi

Authors

Kalpana Tyagi
View author publications
You can also search for this author in PubMed Google Scholar

Rights and permissions

Reprints and permissions

Copyright information

About this chapter

Cite this chapter

Tyagi, K. (2019). Theories of Harm: Conglomerate Effects and Types of Evidence. In: Promoting Competition in Innovation Through Merger Control in the ICT Sector. Munich Studies on Innovation and Competition, vol 10. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-662-58784-3_6

Download citation

DOI: https://doi.org/10.1007/978-3-662-58784-3_6
Published: 22 June 2019
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-662-58783-6
Online ISBN: 978-3-662-58784-3
eBook Packages: Law and CriminologyLaw and Criminology (R0)

Publish with us

Policies and ethics