How effective are remedies in merges cases? A European and national assessment

Polemis, Michael (2018): How effective are remedies in merges cases? A European and national assessment.

Abstract

Remedies form an essential tool of any enforcement action and need to be devised with great caution from National Competition Authorities (NCAs). If the remedy is ineffective, the enforcement action does not reach the desired objective and resources will have been wasted. If the remedy is disproportionate, the decision is put at risk in a possible subsequent appeal. Remedies either behavioural or structural imposed by competition authorities seek to eliminate unilateral or/and coordinated effects as a result of the merger and restore competition on the relevant market(s) to the status quo ante. Moreover, remedy packages have typically included extensive structural divestments to remove competition concerns. The scope of this paper is to examine various issues relating to the imposition of remedies in merger cases focusing on the gas and electricity sectors (commodity and capacity release programmes, customer release schemes, network related remedies). This paper relies on the energy sector with a view to developing general principles for imposing effective remedies in other sectors as well. Given the nature of competition in energy markets, particularly effective remedies are those that involve gas release programmes, the sale of price-setting generation plants, network assets, and controlling stakes in merging parties’ competitors.

• Item Type: MPRA Paper
• Language: English
• Keywords: Merger remedies; competition; energy sector; Gas release programs; European Union
• Subjects: G - Financial Economics > G3 - Corporate Finance and Governance > G34 - Mergers ; Acquisitions ; Restructuring ; Corporate Governance; K - Law and Economics > K2 - Regulation and Business Law > K21 - Antitrust Law; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L10 - General; L - Industrial Organization > L4 - Antitrust Issues and Policies > L40 - General

References

Federico, G. (2011). The economic analysis of energy mergers in Europe and in Spain. Journal of Competition Law & Economics, 7(3), 603–629.

Geradin, D. (2004). Remedies in Network Industries: EC Competition Law vs. Sector-Specific Regulation, p. 57. International Competition Network (2016). Merger Remedies Guide.

International Competition Network (2016). Merger Remedies Guide.