COMPETITION • EUROPEAN AND FRENCH LAW • ANTICOMPETITIVE EFFECT
Decision-making practice in merger cases describes as the “spiral effect” the risk of squeezing out distributors due to their small size. In the distribution sector, the spiral effect results from the fact that the market shares of retailers on the downstream market are able to determine, to a greater or lesser extent, the competitiveness of their purchasing conditions, and vice versa. In this context, a brand that improves its purchasing conditions also ultimately improves its competitiveness on the downstream market, and vice versa. Such a spiral effect could ultimately lead to an excessively concentrated market structure, to the detriment of both consumers and suppliers.
Thus, in a two-sided market, such as the free-to-air television market, which is aimed at both viewers and advertisers, the existence of leverage effects between the advertising market and the broadcasting rights market makes it possible to initiate a dynamic of weakening or even eliminating competitors and strengthening the dominant position, thus favoring a spiral effect likely to amplify the negative consequences of the concentration. Similarly, when the distribution and supply markets are so closely interdependent, the creation of a dominant position in one of them leads to the strengthening or creation of a dominant position in the other, as a result of the spiral effect.
