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The Impact of the New Substantive Test in European Merger Control

After a two-year review process, the European Commission adopted on 1 May 2004 a new Merger Regulation,1 replacing the old EU Merger Regulation of 1990. In addition, guidelines on the assessment of horizontal mergers were issued.2 During this review process, one of the most controversial and intensively debated issues surrounding the future regime of European merger control was the new substantive test, the so-called SIEC (“significant impediment of effective competition”) test. This paper addresses the issue of whether the new merger test has made any difference in the way the Commission evaluates the competitive effects of mergers. We approach this question by reviewing the main arguments of why the test was changed and discuss the anticipated impact. It is argued that the new test can be expected to increase both the accuracy and effectiveness of merger control in two ways: first, it may close a gap in enforcement, which may have led to underenforcement in the past; and secondly, it may add to clarity by eliminating ambiguities regarding the interpretation of the old test, which possibly led to overenforcement in some cases. The remainder of the paper looks at the evidence available to date. We review a number of cases and ask in what way—if any—the new merger regime has made a difference. In particular, we ask whether there is any evidence of the above issues of underand overenforcement. We conduct an exploratory review of recent cases notified under the new test where the Commission has identified competition concerns.3 We focus on challenged mergers for two reasons. First, the assessment in such cases tends to April 2006 European Competition Journal 9