Buyer Power in European Union Merger Control

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Series Details Volume 10, Number 1, Pages 69-95
Publication Date January 2014
ISSN 1744-1056
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Introduction:

"Buyer power enables a single buyer, or a group of buyers, to affect the terms of trade with upstream suppliers. It enables a buyer to reduce the price it pays a supplier or to impose other more favourable non-price terms. The power may stem from the attainment of a dominant or collectively dominant position on the market or, alternatively, it may stem from strategic advantages enjoyed by the purchaser."
"In this paper we explore the assessment of, and the significance attributed to, buyer power in the application of the European Merger Regulation (the EUMR). We begin with a short review of the economics of buyer power and the related policy and enforcement implications. Following this, we consider the scarce instances in which buyer power was central to a finding of significant impediment to effective competition. We then explore the more common instances in which countervailing buyer power was considered as a mitigating factor in the analysis of upstream mergers.

We note the relatively limited role played by buyer power considerations in merger appraisal. In the majority of cases buyer power is more likely to act as a “deal changing” factor rather than a “deal breaker”. Accordingly, the possible harmful effects of buyer power are less likely to act as an impediment to the transaction but could trigger additional commitments. Equally, despite the frequent invocation of countervailing buyer power arguments by the merging parties, these arguments play a relatively limited role in the appraisal and clearance of transactions.

 
Source Link https://doi.org/10.5235/17441056.10.1.69
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