Are non-competitive factors relevant?
Merger Control (2nd Edition)
The PCA does not consider non-competition factors while assessing concentrations between undertakings. There are, however, two situations in which non-competition factors are taken into consideration. Firstly, in respect to media sector transactions, the PCA is forced to adopt a prohibition decision, even if the concentration does not raise competition concerns, whenever the media regulator issues a negative (binding) opinion on the grounds of the freedom and plurality of media considerations. Secondly, a prohibition decision adopted by the PCA can be reversed by a decision of the Council of Ministers, following an extraordinary appeal, when “fundamental strategic interests of the national economy” are at stake.
Please see the following answer.
Non-competition factors are relevant in certain 'public interest' cases – see Section 15 below.
In addition, for any type of case, the CMA may take into account the existence of transaction-specific efficiencies and 'relevant customer benefits'. If these outweigh a transaction's negative effects on competition, the CMA may decide to clear the merger. It may also take relevant customer benefits into account when assessing what remedies should be required in order to address any anticompetitive effects of a transaction.
Relevant customer benefits include lower prices, higher quality or greater choice of goods or services, or greater innovation in relation to such goods or services.
Pursuant to Art. 25(1) of the Law, the ICA can exceptionally authorize a concentration that would be otherwise prohibited, if relevant national economic interests are involved, provided that the concentration does not eliminate competition on the market or impose restrictions going beyond the national economic interests at stake. The Government sets forth the criteria based on which the ICA clears the transaction. The latter can anyway impose measures necessary to restore competition within a certain period.
Pursuant to Art. 25(2) of the Law, even if the clearance decision has been adopted by the ICA, the Italian Prime Minister may prohibit, for reasons of national economy, an acquisition of an Italian company by a foreign company. This may happen when, in the country of origin of such foreign company, Italian undertakings are discriminated, especially in connection with their ability to acquire local companies (sort of rule of reciprocity).
Finally, pursuant to Art. 20(5-bis) of the Law, upon request by the Bank of Italy, the ICA may clear a concentration involving banks, which creates or strengthens a dominant position, to protect the economic stability of one or more of the parties.
Section 7 of the Clayton Act was designed to protect competition, not competitors. When reviewing a transaction, the FTC and DOJ focus on its impact on competition, and do not consider other factors in the analysis.
Non-competition factors are not relevant.
Review by the JFTC under the Antimonopoly Act focuses on competition factors. While the Industrial Competitiveness Enhancement Act allows a government ministry relevant to the industry to which merging parties belong to discuss with the JFTC an applicable pending merger, the Act does not encourage the JFTC to take into account any non-competition factors in its review.
Special provisions apply to media concentrations, aiming to preserve media diversity. Hence, notifiable mergers are not only subject to the market dominance test but may also be prohibited if it is expected that the media diversity will be impaired.
Under Austrian law, media diversity is the existence of numerous independent media which are not connected and which shall guarantee press coverage reflecting a range of opinions. A concentration is classified as a media concentration if at least two of the undertakings involved in the merger are considered to be a media company; a media service (Mediendienst) or companies providing auxiliary services for media companies (Medienhilfsunternehmen) or other undertakings, which hold at least 25% of the shares of one of these companies. The terms are all legally defined in the Austrian Media Act.
It may also be mentioned that, pursuant to the Cartel Act, the Cartel Court is to clear a concentration even if the dominance test is fulfilled in case the concentration is indispensable for maintaining or improving the international competitiveness of the undertakings involved and justified macro-economically. However, in practice, this provision hardly plays a role.
The CPC only takes competition issues into account when considering the Service’s report and issuing its decision. However, the Minister of Energy, Commerce, Industry and Tourism can, by issuing a justified order, declare a concentration as being of major public interest with regard to the effects it might have on public security, pluralism of the mass media and the principles of sound administration.
The substantive test described above does not allow for non-competition factors to be taken into account. However, this does not mean that there is no room for political considerations.
In principle, the FCA should only take competitive factors into account.
The residual powers of the Ministry of Economy in merger control are based on matters of public interest which may be considered as "non-competitive factors" - industrial development, employment.
Maltese law and OFC practice do not contemplate any other factors which are considered when the DG is conducting the evaluation.
No. Neither the NCA nor the Competition Appeals Tribunal (“CAT”), which became operational in April 2017, may take into account other factors than those related to effects upon competition. Note that this was not always the case. Prior to the CAT becoming operative, the previous system for administrative review by the Ministry allowed the Government (“The King in Counsel”) to intervene on public policy grounds.
In applying the substantive test, the Competition Council takes into account competition-related factors.
However, economic concentrations presenting risks for the national security must also be reviewed by the Supreme Council of National Defence, which analyses them from a national security standpoint.
KN: No. Such factor are not taken into account under Serbian merger control rules.
The Commission must also consider whether the merger can be justified on substantial public interest grounds, particularly the effect of the merger on employment; the ability of small businesses or firms controlled by historically disadvantaged persons to become competitive; and the ability of national industries to compete in international markets.
The Commission has shown concern for issues such as employment with regard to both mergers and complaints of prohibited practices. In some recent merger decisions, the Commission has been unwilling to accept merger-related job losses. Further, the Commission has recently indicated that certainty from merging parties is required as to whether job losses will occur as a result of a merger or not.
Notwithstanding the above, in the vast majority of cases, competition arguments are the Commission’s main focus and the basis on which decisions are made. However, public interest considerations remain significant. An illustration of the significance of public interest considerations is the large merger between the US corporation, Wal-Mart Inc. (Wal-Mart), and South African wholesaler and retailer, Massmart Holdings Ltd (Massmart). Wal-Mart had no presence in South Africa and the Commission recommended unconditional approval of its proposed acquisition of a 51% stake in Massmart.
Public interest concerns were raised by trade unions and industry bodies in relation to Wal-Mart’s record on labour rights and the effect of its procurement practices on local manufacturers and suppliers. Three government departments made submissions to the Tribunal that the acquisition would lead to thousands of job losses, worsening labour conditions and the squeezing out of local suppliers.
The Tribunal approved the merger subject to conditions including a moratorium on retrenchments for two years and an obligation to give preference to 503 employees retrenched during 2010 when employment opportunities become available within the merged entity.
The merged entity was also required to establish a programme for the development of local suppliers and contribute ZAR 100 million to the programme, to be expended within three years. In 2012, following the Tribunal’s decision, the CAC upheld, in part, an appeal by a trade union against the Tribunal’s order. However, the CAC approved the merger subject to conditions and held that there was insufficient evidence to conclude that the public interest concerns (in particular, the effect of mergers on employment and on small and medium-sized businesses) should result in the prohibition of the merger.
Notably, the CAC accepted that there were legitimate concerns about the effect of the merger on small producers and therefore consequent effects on employment and recognised that the provisions of the Act required measures to be taken to safeguard the public interest concerns, in particular, those regarding small producers.
Non-competition issues are not taken into account.
No, the AMC considers the transaction only from the competition standpoint.
Yes, CADE will take into account non-competitive factors. According to the introduction of the authority’s guide on horizontal concentration acts, CADE operates on a notion that mergers create positive and negative effects, including for instance the introduction of a better technology in the market, a better quality of the products/services offered, bigger number of products offered in the market, etc.
The substantive test is focussed on assessing the impact of the proposed transaction on competition. The ACCC does not typically take into account matters such as efficiencies except to the extent that they may have an impact on competition in the relevant market.
Parties wishing to rely on efficiencies and factors unrelated to competition typically consider whether to seek authorisation from the Tribunal, rather than clearance from the ACCC.
Yes. In addition to the substantive test, Article 22 of the LORCPM provides that the Competition is deemed to analyze the following factors:
The contribution of the merger to:
- The development and promotion of technological or economic progress for the country;
- The development and competitiveness of the domestic industry in the international market;
- The consumers welfare;
- The diversification of equity within the workers of the target or acquirer.