28 March 2018

Competition experts worry over populism impact on mergers

Competition experts have expressed worries about political populism and global differences on mergers.

Competition experts at the recent International Competition Network (ICN) Annual Conference expressed concerns about global differences in opinion of the degree and circumstance in which vertical mergers and vertical restraints may be harmful to competition and consumers. The conference, held in New Delhi, attracted over 500 participants from 73 countries and 84 jurisdictions. Discussion centered on vertical restraints, mergers and leniency programmes. US courts have been less convinced of harm than the European courts. The debate, however, is being influenced by competition enforcement coming under increasing pressure from populist politics and public distrust.

Burden of proof

Agencies have different opinions on where the burden of proof should lie in cases concerning vertical restraints, but delegates agreed that an evidence based, fact-specific approach is essential when dealing with complicated vertical business practices. One Non-Governmental Advisor (NGA) stated at the event: 'You do not have to be a PhD economist to deal with vertical mergers!' However, horizontal mergers may also restrict competition and horizontal restraints have harmful effects.

Fairness and effectiveness

Participants stressed fairness and effectiveness, and a balance between due process and swift and effective enforcement, are necessary. There was also agreement on the need to conduct market studies to understand digital markets better. Digitalisation and globalisation means competition agencies are increasingly facing different kinds of markets and evolving business models. Conference materials can be found here.