The control of concentrations

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

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