Joint statement by several competition authorities on merger control
The German Federal Cartel Office, the UK Competition and Markets Authority (CMA) and the Australian Competition and Consumer Commission (ACCC) agreed on a joint statement on merger control on 20 April 2021.
The joint statement reflects the three authorities’ shared understanding that consistent merger control enforcement is key to preserving competition and diversity. The heads of the three authorities, Andreas Mundt (President of the Bundeskartellamt), Andrea Coscelli (Head of the CMA) and Rod Sims (Chairman of the ACCC), met virtually to discuss common merger control challenges, such as the digital economy, globalisation and the impact of the COVID-19 pandemic.
Andreas Mundt: “Effective merger control is the most powerful tool we have to prevent too much market power from falling into the hands of a few companies. Especially in the digital economy, many markets are already highly concentrated. Further takeovers and mergers can tip a market or create ecosystems that are almost unassailable for competitors. That is why stringent control is indispensable.”
Andrea Coscelli: “Once our countries have overcome the Corona pandemic, competition will play a crucial role in reigniting economic growth in our countries. That is why I am pleased that we are pulling together with colleagues in Australia and Germany with this latest declaration.”
Rod Sims: “I am pleased to be able to issue this joint statement together with the authorities in the UK and Germany. We all recognise that competition is fundamental to the success of market economies and depends crucially on effective merger control.”
In the joint statement, the three authorities express their agreement on the principles of effective merger control. With this tool to proactively preserve open markets and diversity, competition authorities can prevent harm to consumers before it occurs. Competition increases consumer confidence in markets, makes market economies work and promotes economic prosperity through low prices, choice, quality and innovation. At the same time, companies are more successful in competition both at home and abroad.
Andreas Mundt: “In appropriate cases, impending competition problems can be solved by imposing conditions. Structural conditions are clearly preferable here, because they secure the competitive framework permanently. For good reason, German merger control does not allow for conditions that subject the companies involved to ongoing behavioural control.
Procedures for abuse control are difficult, lengthy, paved with economic and legal questions in the case of big tech, and they only apply to concrete behaviour. If we don’t apply merger control consistently and prohibit anti-competitive mergers, we will have to walk a very rocky road afterwards.”
Andrea Coscelli: “It is economically proven that competition is essential for innovation and performance and to ensure sustainable growth and employment in the long term. Some UK companies also tell me that once a problematic project has been cleared, they find themselves in a very difficult position and in some cases cannot survive because they can no longer compete. It is important that, in the interests of business and consumers, we continue to scrutinise merger proposals thoroughly – particularly in dynamic markets such as digital – and take decisive action where necessary.”
Rod Sims: “Companies have a clear incentive to merge with or acquire competitors in order to increase their market power and raise their prices. This is exactly why effective merger control is so important and why some mergers need to be stopped by competition authorities.
Once a company has gained market power as a result of a merger, we know that it is very difficult to restore competition with the other instruments of competition law; therefore, it is crucial for us to use merger control more effectively.
The focus of competition authorities and judicial bodies must be on the importance of protecting competition and preventing anticompetitive mergers; otherwise, there is a risk that merger control will become a merger clearance tool, harming our economy.”
In Germany, the Bundeskartellamt’s case practice shows that merger control proceedings are subject to very high standards and have a high degree of complexity. Competition authorities around the world produce differentiated economic analyses, use modern examination methods and continuously develop their methodological approaches to ensure that all features of dynamic markets, digital business models and globalisation are taken into account and appropriately assessed. In the view of the three heads of authority, merger control is therefore well equipped for the future.
With the 10th amendment to the Act against Restraints of Competition, which recently came into force, the turnover thresholds in merger control in Germany were raised. At the same time, the Bundeskartellamt can now oblige companies to notify mergers below the general turnover thresholds under certain conditions. The Bundeskartellamt welcomes these changes as more resources can now be used to examine the really critical cases. This paves the way towards a future-oriented, stringent merger control.
Source: Press release of the Bundeskartellamt dated 20.04.2021