Corporate & Securities Law

The EU’s Bass Ackward Approach to Evaluating Mergers

As American antitrust regulators hurdle headlong toward a Europeanized (i.e., competitor-focused) antitrust, I do hope they will at least avoid the tack the EU has taken in evaluating Lufthansa’s proposed takeover of Austrian Airlines. The Wall Street Journal is reporting that EU Antitrust Chief Neelie Kroes has directed her subordinates to draft a “conditional clearance” that approves the merger subject to Lufthansa’s surrender of a number of routes. Lufthansa offered to give up those routes “in response to the concerns raised by competitors,” the Journal reports. It also reports that EU regulators enlisted the assistance of Lufthansa’s competitors in fashioning the conditions to merger approval:

The commission sent out a questionnaire to Lufthansa’s competitors and other interested parties to see whether they think the offer made by Lufthansa was enough to remove competition bottlenecks identified in the commission’s investigation into the takeover.

Let’s not forget, folks, that the competitors of merging companies stand to benefit from reduced competition and to lose from increased competition. Thus, some helpful rules of thumb: If the competitors of merging companies oppose a merger, it’s probably going to enhance competition. If those competitors are in favor of the merger, it’s probably anti-competitive. If you let competitors set the conditions under which the merger may proceed, you’ll probably end up reducing competition.

Haven’t we been through this before?

Full post as published by Truth on the Market on August 04, 2009 (boomark / email).