Merger Remedies

Abstract

Merger remedies are used by competition agencies to prevent the harm to the competitive process that may result as a consequence of a merger. They allow for the approval of mergers that would otherwise have been prohibited, by removing the anticompetitive concerns that a given transaction may pose to competition. First, we present the typology of merger remedies generally used. Second, we analyze the link between the size of the offered remedies and the level of efficiency gains announced in a context of asymmetric information. Third, we summarize the results of several retrospective merger studies in which remedies have been used.

Competition agencies use merger remedies when a notified merger is likely to raise some competitive concerns. In this case, the merging firms may make a remedial offer, which may be accepted or rejected by the agency. In this entry, we derive examples mainly from the European Commission (hereafter “the EC”) even though most mechanisms can be found in any competition agencies worldwide.

Actually, remedies are relatively less used with respect to the total number of notified merger proposals to agencies. According to the EC’s data, less than 10% of notified mergers are eventually conditioned upon merger remedies (see the EC’s website for detailed data on the European merger control, http://ec.europa.eu/competition/mergers/statistics.pdf). The majority are approved without any conditions. However, these remedies may be found in large or complex merger cases. In the absence of remedies, such mergers would be rejected.