The Counterfactual Analysis in EU Merger Control

Posted by Social Science Research Network

The Counterfactual Analysis in EU Merger Control

ABSTRACT: The counterfactual method, which can be used to assess the effects of an actual or a hypothetical event, has always played an important role in EU competition law. It has recently gained further traction as the Commission endeavors to adopt an effects-based approach under Articles 101 and 102 TFEU. Counterfactuals are discussed in various Article 101 guidelines and in the Article 102 Guidance Paper. In June 2013 the Commission published a Communication and a Practical Guide on quantifying antitrust damages, which contain a detailed analysis of various counterfactuals.

In this paper, we examine the use of the counterfactual method in EU merger control. The goal of EU merger control is to prevent transactions that would significantly impede effective competition. As pointed out in the Horizontal Merger Guidelines, in order to evaluate the effects of the transaction the Commission conducts a counterfactual analysis by “compar[ing] the competitive conditions that would result from the notified merger with the conditions that would have prevailed without the merger”.

The term “counterfactual” refers to the hypothetical scenario in which the merger would not take place. If the Commission finds the counterfactual to be significantly more pro-competitive than the merger scenario (“the factual”), it would oppose the transaction unless the parties offer adequate remedies.

Because EU merger c

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