The control of concentrations

Author:Ovidiu-Horia Maican
Position:Law Department, Bucharest University of Economic Studies, Romania
Pages:133-142
SUMMARY

Concentrations of companies have developed in the last 40 years, as an effect of open borders within the European Union. The question from the point of view of competition is if setting up a new group or entity may have the same restrictive effects of an agreement. In addition, that may lead to monopoly or oligopoly, which prevents effective competition. Concentrations are situations when one or... (see full summary)

 
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THE CONTROL OF CONCENTRATIONS
Lecturer Ovidiu Horia MAICAN
1, Ph. D
Abstract
Concentra tions of companies have developed in the last 40 year s, a s an effect of open bor ders within the
Europea n Union. The question from the point of view of competition is if setting up a new group or entity may have the
same restr ictive effects of an agreement. In a ddition, that may lea d to monopoly or oligopoly, which pr events effective
competition. Concentra tions are situa tions when one or more companies acquir e control of other companies, cha nging
the structure of the companies involved a nd of the market. The most importa nt forms of concentr ations of
underta kings are the holding by a company of the capital of another company or of other companies, the total or partia l
acquisitions by a compan y of the assets of other companies a nd the merger of two or more companies which ar e legally
independent into a new company. Sometimes, where the concentration in a n industry exceeds certa in limits it can lea d
to monopoly or oligopoly structures, which restric t competition and jeopa rdise consumers' interests . The legal ba sis for
EU merger control is Council Regula tion (EC) No 139/2004. The r egulation prohibits merger s and a cquisitions which
would significantly reduce competition in the Single Market, if they would crea te dominant companies and are likely to
raise pr ices for consumers.
Keywords: economic concentrations, competition, fair competition, Comission
JEL Classification: K21
I. Introduction
Another threat to ensure free and fair competition is the negative effect of the concentration
of economic power.
Competition and interstate commerce within (inside) the European Union may be adversely
affected not only by "cartels" (agreements between undertakings, decisions by associations of
undertakings and concerted practices), but also by the "dominant positions" or "economic
concentrations".
Therefore it was intended to control the strong economic position of those able to dominate
the market, while pursuing the benefits arising from such a position.
II. Historical aspects
At the the beginning, there was nothing specified in the Treaty of Rome (EEC Treaty) on the
issue of merger because there were no agreements between the parties (undertakings). Finally,
Regulation of 21 December 1989 (Regulation 4064/89, OJEU L no. 395/1 of 30 December 1989)
which was amended by Regulation of no. 1310/97 of 30 June 1997 (OJEU L no. 180/1 from 9 July
1997) was focused on concentrations.
Commission in Brussels has opposed, therefore, to eight mergers in eight years. 2
The most controversial decision was the intention of purchasing of De Havilland by
Aerospatiale and Alenia (dec. October 20, 1991). 3
Some companies prefer to abandon projects (audit firms KPMG and Ernest & Young), while
others impose their conditions (case Boeing-McDonnell Douglas). 4
A concentration is achieved when two or more previously independent undertakings merge,
or when one or more businesses that already have a firm control or one or more undertakings
1 Ovidiu Horia Maican - Law Department, Bucharest University of Economic Studies, Romania, ovidiuszm@yahoo.com
2 Gerard Druesne, George Kremlis, La politique de concurrence de la Commmunaute Economique Europeene, Paris, Presses
Universitaires du France, (1990) p. 59
3 Alain Guedj, Pra qtique du droit de la concurr ence national et communautaire, Paris, LITEC, 2000, p. 79
4 Ibidem

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