CAUSATION IN EC MERGER CONTROL

Antonio Bavasso and Alistair Lindsay

Journal of Competition Law and Economics, 2007, vol. 3, issue 2, 181-202

Abstract: “there are ever so many ways that a world might be; and one of these many ways is the way that this world is” (David Lewis, 1986)This article looks at two areas of merger control under EC Law where the principles of causation are applied and, in our view, misapplied. The article traces the development of the concept of the “counterfactual” in antitrust law. It then draws on this analysis in considering the operation of the “failing firm defense,” and in particular the standard of proof employed by the Commission when analyzing the “counterfactual” in relation to the failing firm defense. We argue that the Commission employs an excessively high standard of proof, and that this standard of proof contributes to the drawing of the failing firm defense too narrowly, through a misapplication of the principles of causation. We then proceed to contrast and prefer the approach of the UK Competition Commission in recent cases. In the final part of the article we consider scenarios where two or more mergers are contemplated in the same market at the same time, in cases of both parallel and overlapping mergers. In these complicated scenarios, which require prospective, multifaceted analysis, we set out in detail how, despite inherent difficulties, a similarly rigorous application of the principles of causation produces coherent results.

Date: 2007
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