Competition • French Law • Mergers
As stated in the Competition Authority’s merger control guidelines, conglomerate mergers open up the possibility of developing synergies between the various components of the new entity. Some of these synergies may produce restrictive effects on competition when they make it possible to technically or commercially tie the sales or purchases of the new entity in such a way as to foreclose the market and eliminate competitors. Offerings that tie or bundle goods or services produced in separate markets may be of different types. Like the EU courts, the Authority distinguishes between :
– pure bundling, i.e. tied sales as a result of a commercial policy imposing to purchase two or more products together;
– technical bundling, i.e. tied sales as a result of technical constraints;
– mixed bundling, i.e. the sale of several products together under better conditions than the ones proposed if the products were purchased separately.
The analysis of a risk of restrictive effect is carried out in three stages: first, the Authority looks at whether the new entity has the ability to foreclose its competitors, second, whether it has an economic interest in doing so, and third, whether a foreclosure strategy would have a negative impact on competition that would be detrimental to consumers. The credibility of such a scenario must be examined in particular on the basis of past behavior illustrating the interest of the undertakings concerned in such offers.
