Goals of Concentration Control and the Main Legal Tests for the Evaluation of Concentrations
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Abstract
The main goal of concentration control and basic legal tests applied worldwide for the evaluation of concentrations, such as “dominance”, “significant impediment of competition” and “substantial lessening of competition” are analysed in this article.
Every control, whatever its nature, is implemented in order to reach certain goals. In the first part of this article we analyse the goals of concentration control in different jurisdictions – mostly in the European Union, the USA and Lithuania. Four basic market security standards are excluded: economic efficiency, protection of consumers, protection of competitors and protection of effective market competition. At the end we make a conclusion that the same standard, namely that of consumer protection, is applied in all those jurisdictions and that more attention should be paid for the protection of competitors and competition as a whole.
Secondly, “dominance” test, applied in the EU under Regulation 4064/89, is analysed in detail. Moreover, the article discusses the meaning of a “dominant position”. We uphold the clarification of “dominance” provided by the Court of Justice, according to which dominance means the ability “to act to a considerable extent independently of their competitors, their customers and, ultimately, of consumers”. It is argued that “dominance” test is not sufficient for contemporary economics. The main disadvantage of this rule is that it is inapplicable for concentrations that do not create or strengthen dominant position.
Furthermore, the new European Union rule of “significant impediment of competition” can be named as a smart European decision that tackled several problems: the practice of the Court of Justice remained applicable for future cases, because no serious changes to the wording of the rule were made. The detection of “dominant position” became only an alternative means to impede competition.
In addition to this, the USA, the UK rule of “substantial lessening of competition” is compared to the two rules referred above. The concept of “monopoly” used in the wording of the rule, as well as the practice of the USA courts concerning the evaluation of market concentrations is analysed. We conclude that literally the phrases “significant impediment of competition” and “substantial lessening of competition” are different, but the content of these rules is the same. Different decisions taken in the same or similar cases on both sides of the Atlantic depend not on a certain rule but on the means of its application and some other circumstances (social, political factors, etc.).
Finally, it is argued that practice of the evaluation of concentrations in the Republic of Lithuania is extremely poor. According to the present findings of the Competition Council of the Republic of Lithuania, it is hard to say the kind of approach the Council follows or, in other words, what kind of a rule the Council applies. Despite the fact that competition law in Lithuania was updated in conformity with the changes made in the EU competition law, we state that the test of “dominance” is further applied in certain concentration cases.
Every control, whatever its nature, is implemented in order to reach certain goals. In the first part of this article we analyse the goals of concentration control in different jurisdictions – mostly in the European Union, the USA and Lithuania. Four basic market security standards are excluded: economic efficiency, protection of consumers, protection of competitors and protection of effective market competition. At the end we make a conclusion that the same standard, namely that of consumer protection, is applied in all those jurisdictions and that more attention should be paid for the protection of competitors and competition as a whole.
Secondly, “dominance” test, applied in the EU under Regulation 4064/89, is analysed in detail. Moreover, the article discusses the meaning of a “dominant position”. We uphold the clarification of “dominance” provided by the Court of Justice, according to which dominance means the ability “to act to a considerable extent independently of their competitors, their customers and, ultimately, of consumers”. It is argued that “dominance” test is not sufficient for contemporary economics. The main disadvantage of this rule is that it is inapplicable for concentrations that do not create or strengthen dominant position.
Furthermore, the new European Union rule of “significant impediment of competition” can be named as a smart European decision that tackled several problems: the practice of the Court of Justice remained applicable for future cases, because no serious changes to the wording of the rule were made. The detection of “dominant position” became only an alternative means to impede competition.
In addition to this, the USA, the UK rule of “substantial lessening of competition” is compared to the two rules referred above. The concept of “monopoly” used in the wording of the rule, as well as the practice of the USA courts concerning the evaluation of market concentrations is analysed. We conclude that literally the phrases “significant impediment of competition” and “substantial lessening of competition” are different, but the content of these rules is the same. Different decisions taken in the same or similar cases on both sides of the Atlantic depend not on a certain rule but on the means of its application and some other circumstances (social, political factors, etc.).
Finally, it is argued that practice of the evaluation of concentrations in the Republic of Lithuania is extremely poor. According to the present findings of the Competition Council of the Republic of Lithuania, it is hard to say the kind of approach the Council follows or, in other words, what kind of a rule the Council applies. Despite the fact that competition law in Lithuania was updated in conformity with the changes made in the EU competition law, we state that the test of “dominance” is further applied in certain concentration cases.
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Please see Copyright and Licence Agreement for further details.
