Alexandr Svetlicinii European University Institute CLEEN Workshop Panel: Mergers

1. Exploring the Role of Legal Presumptions under the “Convincing Evidence” Standard in EC Merger Control Alexandr Svetlicinii European University Institute CLEEN Workshop Panel: Mergers ESRC Centre for Competition Policy, University of East Anglia, Norwich, UK 11-13 June 2008

2. Structure • Sophistication of merger assessment • Concept of legal presumptions • Substantive presumptions: non-horizontals, conduct analysis • Procedural presumptions: source of evidence, prospective and retrospective analysis • Illegality and its deterrent effect on future conduct • Concluding remarks

3. Background • SIEC test under new ECMR: reasons and implications • Jurisprudence of Community courts • Sophistication of merger assessment: • - non-horizontals (conduct, effects) • - efficiency defence • - institutional conflicts

4. Scope of Research • Application of economic theories and economic evidence in the legal context of merger assessment: - Assessment of non-horizontal concentrations - Methodology for conduct analysis - Efficiency defence • Institutional balance: role of Commission and Community courts in merger assessment

5. Concept of Legal Presumptions • US antitrust: “per se rules” and “rule of reason” • EC merger control: structural presumptions – market share thresholds • Present work: “Soft” presumptions? – substantive/procedural • “Convincing evidence” as rebuttal?

6. Substantive Presumptions Non-Horizontals • Tetra Laval: “generally neutral or even beneficial for consumers”, proof to the opposite – “convincing evidence”? • Chicago and Post-Chicago approaches in Non-Horizontal Guidelines (relevant distinction?) • Room for efficiency defence?

7. Substantive Presumptions Conduct Analysis • Ability-Incentive-Impact in Community jurisprudence and Non-Horizontal Guidelines • Incentives = Commercial interests? (trade-off between costs and profits of foreclosure practices) • Correlation with other factors influencing future conduct?

8. Procedural Presumptions:Source of Evidence • Specifics of Impala: new legal test for collective dominance? “convincing evidence” for proving the absence of “convincing evidence”? • Merging parties v. third parties: campaign discounts and PPDs • Third party evidence under scrutiny: Commission’s questionnaires

9. Procedural Presumptions:Retaliation Mechanism • Retrospective v. prospective investigation • “as the assessment of the risk of the creation of a collective dominance position is not, by definition, based on the existence of a prior common policy, the criterion related to absence of retaliatory measures in the past is wholly irrelevant” • “Theoretic heterogeneity” of economic science • Inconsistency?: presumption of common pricing policy based on the evidence of past conduct • Implications for merger investigations

10. Substantive Presumptions:Illegality and Its Deterrent Effect • Taking illegality into account (from TetraLaval to General Electric): convincing evidence or summary evidence? • Established presumption? “although it cannot be presumed that Community law will not be complied with…such a possibility cannot be excluded by the Commission” • Chances? CFI will “take account only of conduct which would, at least probably, not be illegal”

11. Substantive Presumptions:Illegality and Its Deterrent Effect • Presumption of legality – inconsistency with economics • Practical difficulties • Conceptual disagreement: ex ante v. ex post, enforcement policy and diverging burden of proof • Correlation with other factors

12. Concluding Remarks • Legal presumptions: tendencies in creation, modification and codification of legal standards • Legal presumptions: possible response for increasing sophistication of merger assessment, key tools in the emerging methodology • “Convincing evidence”: framework for rebuttal of legal presumptions? • Monitoring and guiding the development of legal presumptions in EC merger control